The Elephant in the Room, page-9

@Rob79, This might be the easiest way to look at it.

$20,500,000 / EBITDAX < 4.25

Therefore EBITDAX > $4.825M on an annualized basis.

Therefore June 2016 Qtrly EBITDAX needs to be greater than $1.205M

Calculate an EBITDAX proxy number BEFORE Hedging gains/losses

Let's use your round numbers of 106,000 as the estimate for oil production. Again doesn't have to be exact. Implies each Bbl produced has to "Earn" ~ $11.3/Bbl.

Let's stay bullish and say Qtr avg price of oil was $45/Bbl (makes the hedges now a negative doesn't it).

Bakken Differential ~ $7.50/Bbl
Production taxes ~$3.75/Bbl
G&A ~ $7/Bbl (using the $750K mandated cap on G&A)

That leaves $26.75 before LOE taken into account.

Now FB Round 1 are well workovers. That is usually considered as a lease operating expense and not a capital cost. I'm hopeful that at least the equipment can be considered as Capex - but we shall see.

If you use $15/Bbl as LOE then you are left with $11.75 as EBITDAX proxy BEFORE HEDGES. Add or subtract net hedge gains/losses after expenses.

That's why I am focused on it.


@buc, any increase the rate of growth in demand is good for E&P and that article certainly illustrates that and also how long it will last. Oil aint going away any time soon.