Mickey I don't have an LSE account but I can see the discussion...

Mickey

I don't have an LSE account but I can see the discussion you are having with Mike over the numbers and thought I would comment here for you.

The simplistic way I understand the numbers, based on the mid or expected case, are:

Revenue is 30,000 x $45 x 365 = $492,750,000 USD
Cost is 30,000 x $39 x 365 = $427,050,000 USD
Net Profit = $65,700,000 USD per annum (for 10 well initial development)

That is approx. 11mil Barrels per year produced. At that rate, if we take the resource size to be 2.5Billion Barrels recoverable, it would take 227 years to deplete the field. The $39 breakeven number as I understand it, includes finding and exploration costs, development capex costs, sustaining capex, opex, G&A, royalties and taxes and make good on completion costs. Therefore the net profit is just that, net profit after all costs. The only thing to be divided after that is the proportioning of the profits to the stakeholders being 88E, BEX and Farminee.

As I understand, DW's idea of a full field development is to produce around 250,000 to 300,000 barrels per day. The TAPS has plenty of capacity for it and that sort of production would bring the break even numbers down into the lower levels. That level of production would give a field like 8-10 years, based just on the HRZ as we currently know it. Any conventional would add to that.

So if we look at revenue on an initial 10 well development costing around $270mil USD, then I would think the payback period on the capital is somewhat less than 2 yrs, and probably closer to just over 1 year, if we use the mid case numbers.

As you say, if POO is in the $60-$70-$80 area by the time of field development, then the numbers are just enormous and would justify 88E being worth multiple Billions and PB getting his everest like Billion+ as well.

That is what i understand DW's thinking of 'Cream the Curve' looks like .

cheers
Chilly