Remember HAL is paying ALL the drilling costs for its share of Defender, so the only cost to Samson for Defender is what it paid originally for the land (what was that - about $50/acre? or around $16,000 total for this one 320 acre spacing?). They need to recover the princely sum of about 400 barrels of oil (200 barrels net to Samson) for Samson to break even on this well. The rest is pure profit contribution, and in the process they will have progressed up the steepest part of the learning curve (i.e. the first part) to develop the rest of the Hawk Springs acreage Niobrara horizontals.
I think the market will react positively to anything commercial from Defender, but what will peak the market's interest more is if HAL takes up its farm-in option for the 2nd well - that will be a really telling signal (the fact that HAL has persisted with Defender is already telling imo).
Cheers, Sharks.
SSN Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
