My position on MADs reserves is well publicised, however the reserves are clearly not 0. Typically the minimum economic production rate for a pumped onshore well in Texas at around the depth MADs are is 2-3bbl/d. They have many wells producing at higher rates than that so the reserves cannot be zero.
When you look back at the lifecycle of those wells perhaps they will not be economic or particularly profitable but determination of reserves only looks at forward costs not lifecycle costs.
I tried to discuss this previously and was shot down by many but annualised reserves divided by production is a useful metric for benchmarking proved producing reserves. In an operation such as this I would expect it to be around 8 years, so if MADs net production were 1,000bbl/d reserves would be around 3MMbbl, but anything up to around 12 years could be reasonable so maybe 5MMbbl. Of course MAD don't report net production so it is hard to know. These figures are only producing reserves, there will likely be some proved undeveloped reserves, takes a bit more reviewing maps etc to quantify those but the methodology that was outlined in the original CPR is clearly wildly inappropriate for conventional fields such as these.
FDM Price at posting:
27.5¢ Sentiment: Hold Disclosure: Not Held
