Hi cmonaussie, good to see you do the comparison, because looking at the numbers I dont think we are way off at all (that might sound strange at this stage given the big difference in the numbers you've done).
The reason I say we're not that far apart is because you're comparing net WI numbers in your calculation versus 100% WI numbers in the calculations you've done on my behalf. I stated in the assumptions of my original post on this subject that I was looking at the economics of the overall wells, and therefore did not break it down into SSN's WI.
This means that the net profit contribution of $50/bo that I used has to be divided into the JV partners WI %, and in the FP example you show, to do that you would have to multiply $50 x 67%, which gives a net proft contribution (before income tax) to Samson for a FP well of $33.50/bo. So if you calculate the net income to SSN using the production numbers I used, you obtain:
3 months: 45,000 bo = $1,507,000 6 months: 81,000 bo = $2,713,500 9 months: 108,000 bo = $3,618,000 12 months: 135,000 bo = $4,522,500 24 months: 207,000 bo = $6,934,500
If you compare the contribution figure for 12 months, with a production number of 135,000 bo the $4,522,500 is almost exactly the same as net profit before tax figure of $4,583,571 you obtain for production of 128,445 bo after 1 year + 9 months. Meaning our calculation of net contribution to SSN's WI per bo produced is very close.
The major difference between our figures after 2 years (which is $2M if we are comparing both sets of figures at SSN's 67% WI level, not the $5.5M shown in your post when comparing 100% WI to 67% WI) is due to the number of barrels of oil produced, not due to how our net contribution per bo is calculated.
As far as the calculation of oil production figures, I'm certainly happy to concede that a calculation using an exponential decay model (or hyperbolic decline curve as you call it) is going to be more accurate (assuming you have used a relevant model, which I cant check from your post) than a simplified step-wise approximation calculation. If you review the sequence of posts where I provided my calculation, the point I was trying to make to Goldie in my original post was meant to be illlustrative of how the decline curve worked in terms of initial steep decline and payback period, versus the ongoing value of the flat tail of the curve even at 50 bopd. I wasnt trying to provide an accurate production or profit number - and said so at the time, as well as stating that readers should do their own calculations. Had I intended to be accurate about that, I would have published figures using an exponential decay model, not a simplified step-wise approximation.
Good to see you have not decided to stop posting on SSN. I would like to add to the comment I posted about the value of contrarian contributions and how important I think those contributions are - and how much I pay attention to those contributions. Early last year I had a sizeable (for me) position invested in another stock that I believed in, and a poster on that stock was providing warnings about that stock - in a constructive manner (i.e. not downrampng). That poster turned out to be right and I took a 90% loss on that investment when I eventually got out. I didnt pay enough attention to that poster's comments, had I done so I would and should have ended up much better off. Today I respect what that poster has to say more than anyone else on HC, but I also pay a lot more attention to posters that post against the "thundering herd" - they have to be outright baseless downrampers for me to not pay attention.
Anyway, enough from me. Cheers, Sharks.
SSN Price at posting:
12.0¢ Sentiment: Buy Disclosure: Held
