Hi Vik,With the well decline rates yes, they do decline...

Hi Vik,

With the well decline rates yes, they do decline initially at a faster rate but remember a well has a 35-year life. Most of a wells production is in the first few years however the decline rates slows and the steepness of the decline plateaus to provide a base level of production. Also remember the payout for Jewel / Rangers was approx. 7 months. That means the cost of the well has been recouped and net production for the next 34 years is essentially profit. Note not all wells will have such a short payout though!

Have 20+ wells doing that over 35 years and the cashflow to the bottom line is not insignificant. If they were to drill eventually BRK would have more cash than they need to drill new wells and start returning cash to shareholders. Logically the wells would have to be profitable otherwise no one would have any interest in buying the leases.

My preference though would be a sale and have someone else do all the drilling. As I aint getting any younger and to recoup my investment earlier would be great! But only if it was the best way to maximise profits for shareholders.

In terms of the oil price, who know what it will do. I would never have thought it would remain this high for so long! I guess we have to make hay (or drill wells) while the sun shines.

TP