I re read last statement from Yeager why is it so sensitive this...

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spylord

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11/03/16

12:32

Post #: 17250696
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Originally posted by Red Baron ↑

Reading the US press, massive short covering the last few days which has propelled the POO. Looking at the futures market, forward prices have also surged. For my money, I'm betting it'll come back down to the low 30's.

It's only just dawning on me, the importance of the 1P reserves. These were announced with the annual report end of Feb. The commissioning of the report would have been some time between Jan 14 (when it was announced) and the end of Feb (annual report). During this period, POO was at its lowest, yet they still had 1P reserves certified. You'll remember with their previous (prior to Yeager) reserve reports, these were massively downgraded because they weren't economic and that was before the collapse of POO.

My point being, this acreage is economic at todays prices and they paid a pittance for it. It doesn't really matter where it is, but it must be prime land because only about 5% of shale is economic at todays prices.
Here are 2 examples of sales in the Permian in late 2015 early 2016:

Callon paid $38.8m for 988 acres (39k acre) with 530boe/d prod'n (late 2015)
RSP Permian paid $29m for 1250 acres ($23k acre) 115boe/d 36 drilling locations (late 2015)

Although these are developed, the production is a pittance considering the decline rates, remember we paid $870/acre

Another point is the speed at which they had reserves certified, no doubt to help with the finance.

The low cost producers can produce oil for around $15-20/bl including overheads. What really adds to this cost is DD&A which most pay about $22/bl for. This includes the cost to drill the well & acquire the land. Royalties are also important, most pay about 25%, MAD hasn't released this information. In Chevron's latest presentation, they say 85% of their Permian land they pay no or low royalties - they purchased the mineral rights as opposed to leasing them.

The whole secret to keeping costs down, is to acquire the land cheaply, hopefully MAD will continue to do this.

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I re read last statement from Yeager why is it so sensitive this information to shareholders. Every oil company in USA would know were they have purchased .Information like that spreads like wildfire .

FDM Price at posting: 5.9¢ Sentiment: None Disclosure: Not Held
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I re read last statement from Yeager why is it so sensitive this...

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