TB ordered the Frontier rig IMO before results where known in Hawk Springs and Roosevelt hence his confidence in finding oil in at least in one of the drilling operations. Because of poor results SSN had to come up with plan B, to use of Frontier at North Dakota in its latest pad drilling campaign or otherwise pay a $5M penalty.
On one hand it seemed like a sensible move to have the necessary equipment in place considering drilling rigs where hard to come by in the last 2 years, but on the other hand it may have been better judgment to have waited for results before committing to an 18 month expense on a rig which I believe will not see its full term.
Any cost savings from pad drilling will not eventuate because of the down time in starting the project and the possible payout of the lease agreement. SSN don’t have enough funds to continue drilling at this point in time, but they may be able to sub lease frontier avoiding a large penalty payment.
Cheers Matsim
SSN Price at posting:
2.2¢ Sentiment: None Disclosure: Not Held
