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27/06/11
08:58
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No idea on %age or number of leases affected. That is for SG to clealy state to the market.
However, even small % have a big impact on profitability because the producer bears all the costs but only gets a % of income.
eg $80/bbl WI=100%, NRI=60%
- revenue = $48/bbl
- minus leasing and development costs costs (eg $15/bbl) = $33/bbl
- minus production costs (eg $18/bbl) = $15/bbl
vs
eg $80/bbl WI=100%, NRI=75%
- revenue = $60/bbl
- minus leasing and development costs costs (eg $15/bbl) = $45/bbl
- minus production costs (eg $18/bbl) = $28/bbl
Then take away admin, delays, oportunity cost of money, etc. Is there any value for shareholders?
What if Greece goes belly up and oil drops to $60/bbl? Does SG mothball the project and just draw down $400/k yr while playing Solitare?
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