You've put up good dialogue on other stocks so this info is for your benefit.
(a). I am a shareholder of DVN. DVN is not a player in the DJ Basin. The closest they are to DJ Basin is the PRB (their Rockies Oil business segment) and they are drilling Parkman, Turner & Teapot formations. Currently have 0 (i.e. zero) rigs operating in PRB. Many moons ago they did play around DJ Basin.
(b) DJ Basin is primarily noted for the Niobrara now. Pathfinder is long way from the DJ Basin core producing areas.
(c) Geology is very important with respect to the acreage being explored/developed. This has been shown in spades with stocks like SSN (anyone here remember their Montana Roosevelt Bakken folly - it was marginal at the beginning and proved so at the end). Even with others like say SEA (with the EFS), the difference with acreage with a play is massive. Geology can affect production, oil %, wells per section, number of prospective intervals all of which effect the upside for operators as they de-risk the acreage within their subset of the play. e.g. you noted how close the wells are ... a section is 1 sq mile or 640 acres. These are not horizontal wells but deviated verticals. Looks like 40 acre spacing doesn't it. In a perfect section that would be 66 feet apart drilling in centre of 40 acres.
(d) Nearology means nearby. If it's not in the same county then I would pay no attention to it. If its not even in the same basin (i.e. noting Permian basin activity "land rush") they are having a lend of you
So lets get back to the facts - those which AKK have published (like the one where AKK reported cash flow of $2.4M and operating cash flow of ($1.15) and cash flow from financing of $2.38M) and the one that is on everyone's mind is flow rates.
IMO one of the defining slides of their investor presentation is #25. @Michaeljob - have you read through the thread starting with post # 18516223 and also # 18524385
Those give an unbiased estimation using the information provided by AKK and highlighting potential gaps in the data that may have a fairly large effect.
One point I noted was that while AKK gave a nice "Decline curve" graphic, they failed to provide the partner "Cumulative Production" graphic for them.
Again using the data provided by AKK, an estimated (one has to estimate as the actual parameters are not disclosed) decline curve and cumulative production curve are shown below.
Couple of points to note
1. The graphs are GROSS PRODUCTION (so subtract 25% royalty)
2. Graph estimate for EUR over 10 years - CONTINUOUS PRODUCTION (i.e. no downtime ever). We know this would be impossible. So the economic production of the well will lag (as the days on production will invariably not be 100%
Even with giving AKK the benefit of the doubt (i.e. 100% uptime, EUR at 58,605 BO which is above the 55,677 BO in the presentation) the fundamentals they present are challenging... Just the 1st 5 years of the EUR is presented below
Since everyone is mostly short term focused, the model above which closely tracks what AKK has published (and if you think I am making it up go back and check how accurate my posts were for AKK's foray into EFS with Halcon).
Just doing the green curves:
IP24 hour avg: 86 bopd; current flow rate: 85 bopd; Cumulative Production: 86 BO
IP30 day avg: 80 bopd; current flow rate: 75 bopd; Cumulative Production: 2,405 BO
IP90 day avg: 71 bopd; current flow rate: 60 bopd; Cumulative Production: 6,417 BO
IP180 day avg: 62 bopd; current flow rate: 47 bopd; Cumulative Production: 11,165 BO
IP 270 day avg: 55 bopd; current flow rate: 39 bopd; Cumulative Production: 14,975 BO
IP 360 day avg: 50 bopd; current flow rate: 33 bopd; Cumulative Production: 18,179 BO
You can do your short term estimates quite simply
1st 90 days for the average well
Gross 6,417 BO produced
Net AKK 4,813 BO
WTI Benchmark say@$50 less regional differential of say $5 (but closer to $10)
Gross revenue to AKK = $215,585
less tax of 2% ($4,330)
less LOE (3 x $3,000 = $9,000) **** I do not believe all LOE is in that figure - just the well expenses)
Call it $200K per well so $600K for the Qtr (at best given 100% uptime etc). Now subtract G&A.
Arguably the first 90 days is the best because AKK has "smoothed" the LOE of $3,000/mth/well
2nd 90 says sees
Gross 4,748 BO produced
Net AKK 3,561 BO
WTI Benchmark say@$50 less regional differential of say $5 (but closer to $10)
Gross revenue to AKK = $160,245
less tax of 2% ($3,205)
less LOE (3 x $3,000 = $9,000) **** I do not believe all LOE is in that figure - just the well expenses)
Call it $148K per well so $444K for the Qtr (at best given 100% uptime etc). Now subtract G&A.
etc.
That's the reality of the Red Queen.
Hopefully that helps with interpreting some of the data.
AKK Price at posting:
0.7¢ Sentiment: None Disclosure: Not Held
