Cash Margin & Oil Price Rise, page-25

This is a simple update to the Cash Margin spreadsheet I've been tracking. So what FACTUAL data can be updated and what remains estimated.

1. Updated Jan production to reflect announced actuals (17,785 boe and 574 boepd)
2. Updated Jan AVG price of WBS and WTI - courtesy PAALP
3. Updated Feb AVG price of WBS and WTI - courtesy PAALP
4. Applied advised G&A costs, implied production taxes, advised interest costs and best guess on LOE on costs advised in Qtrly
5. Estimated Feb and MAr production higher so that Qtr production reaches the advised 1,350boepd from Enercom presentation

Happy to make further (rational) alterations as data comes to hand. Note the Yellow Highlighted rows and the effect that growing production has.




I know there are lots and lots of article's opining views on pricing going up up up ever since the Thanksgiving Day slaughter started 3 months ago (heck a lot of them can be found on this board). I expect that will continue and hope it eventuates sooner rather than later, but it hasn't happened to-date.

However, fact of the matter is price has not recovered - it may have stabilized by noting that WTI avg for month of Jan was $44.46 and for Feb it was $47.35. Sure looks like we are headed for a Qtr where WTI will avg below $50.

That's in the wake of:

* lowest rig count in I think about 5 years (keep in mind though the most productive rigs in the most productive areas are not really being cut - its marginal areas and a lot of verts)

* still growing shale production (see 1st point) and USA domestic production still over 9Mmbopd

* record storage inventory (see points 1 & 2) - a possible looming problem (especially if its unsold oil - I suspect not and the oil has been purchased and stored to take advantage of contango).

* differential between WTI and Brent (or LLS) growing (rapidly) once again (see points 1, 2 & 3)


IMO SSN needs stabilized production at around minimum 1,250 - 1,500 boepd for next 3-6 months to keep the wolf away.