Agree with the need for more info. But the quote from CNE remains highly promising. The leverage effect of improved economics through both scale (number of barrels) and oil continuity, etc, can be quite steep. And these improvements in project economics, through fewer higher-producing wells, etc, are reliable and permanent (as opposed to say opex gains through depressed labour markets which will not be locked in for the project lifetime).
The important thing is that every dollar increase in in the oil price goes basically straight to the bottom line. So, on the face of it, the Cairn exec said that with this much oil, where it is, and the way it is, we believe we can mount a capital project that delivers a hurdle rate return. (So NPV is zero at say 10% discount rate).
Now no-one commits to a project for a zero NPV, BUT every dollar over 30 for expected oil price is an incremental dollar/barrel NPV. So this would imply $10/barrel at 40 oil.
This is a big statement from CNE given earlier estimates, but we live in volatile times. It certainly reflects a degree of excitement in Edinburgh.
FAR Price at posting:
10.5¢ Sentiment: Buy Disclosure: Held
(20min delay)