PYM (ASX) Ann: Capitola Oil Project Operations Update

Originally posted by Sprout ↑

I think you are wrong kelsie. It would certainly seem that the tech angle has legs left. It would also appear that there is some very valid technology thats coming into the mkt. I think both you and I are watching OTE / ISX and thats a great example of an O&G company that has turned to tech with a solid plan. There are certainly a large number who have gone tech but will fail, its obvious for a multitude of reasons. The PYM Capitola wells are not too small. We have two wells in production, one @ 80bopd and one a@ 30bopd and increasing as the frac fluid is produced back. The third has just been stimulated and will go through a similar process to the previous two wells. That is, flow back with a high level of frac and stim fluid and a low oil cut, then and the % of fluid that is produced back increases so to will the oil cut. Lets say we have 5 wells up and running and in steady production by May ( 10 weeks away ) @ a conservative average of 50 BOPD . Thats 250 BOPD with a an NRI across those wells of 56.25%. So, here's the math for you 250 bopd x $US50 x 56.25% = $US7,031.25 per day net to PYM. This means $US210,937 pm is cash flow. This is also based on a $50 oil price. We get a kick in prices over the next 12-18 months and that revenue kicks higher also. With a solid control on costs and the fact that PYM also operate this project and as such control the costs what you have here is a nice play.

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Leasing (3.5M in a year), Exploration (drilling, testing etc) – lets assume 2M year, operating, development, administration, director wages. Now PYM has 8M in Bank. If you extract all expenses and add cash flow (2M in a year) then cash at the end of this year will be 4M AUD. So share price should be correlated to that. Now current cash backing is priced in. So if there is no new break out then share price will be half of that what is now. If oil price will go to 80 USD/barrel then we havea better picture. Anyway we are not making any profit because PYM needs to produce at last 800 barrels per day to stay in profit. For now PYM produces 110 barrel per day. As Sprout says could be 250 barrels when 5 wells are working. Still need more to cover all expenses.