tt2000, nice rounding up of your numbers, 600boepd = 60K per...

tt2000,

nice rounding up of your numbers, 600boepd = 60K per day?? Oil price is sub 90USD again and you haven't accounted for royalties, typically 25%. So I calculate $40K not $60K.

Anyway, what you fail to factor in is the affect of a massive decline, new wells need to come online on a very regular basis to offset the decline.

By March, were the first EFS well to continue to decline to 250boepd (entirely feasible given surrounding acreage) the net revenue effect could be minimal.

Then consider about $5M a pop to drill an EFS well. High capital outgoings and long payback mean deep pockets are required. This was one of the reasons why the market punished AZZ. Much more capital was required to get the company to the point of self funding the development of their EFS acreage. Big dilution was on the cards and there was a real lack of confidence in the acreage. Nobody had the patience to wait 18 months to see if it was a winner even though results mirrored that of EOG and Swift nearby.

AZZ share price peaked after the first well. Then, a few months later, as soon as the declines started to surface, people did the math and worked out that self funding was at least another year away. Investors literally ran for the hills.

AUT had much more time up their sleeves as the farm-in meant the first 10 (?) wells were paid up front. By the time of the 3 Turnbull wells most of the acreage was de-risked and looked outstanding with some of the best declines in the EFS.

So today I think TXN is at a point of developing the EFS acreage similar to where AZZ and AUT were 1 year ago. Yet today I see more similarity between TXN and AZZ. Same county. Same big WI. Same initial big IP. Same 'in-house' approach (no big operator). And same disappointing first report of a decline.

There is a long way to go before writing TXN off on one result. I used the same arguments to support AZZ after the first results. But alas. Suggest you study the divergence between AZZ and AUT from May last year. It is amazing.

As an investor in EFS I think it's important to understand the reasons for this divergence and how the market may view similar results in future.