good points augusta321Back of the envelope calcs:say $8.5m cost...

good points augusta321

Back of the envelope calcs:
say $8.5m cost of well

From announcement 14/7/11 (& pg 27 of the AGM presentation) ->EURs of 420-470k boe

But I'm not sure of the mix of oil to gas over the life of the well and with the 1:6 ratio they use, the mix affects the cash recovery. (eg 1 bo = say US$95 but the equivalent gas = 6mcfg = say 6xUS$6.60 = US$39.6) so the mix makes a big difference.
* Prices come from bottom of page 2 of the progress report dated 23/6/11

From memory TXN has about a 62% net working interest in its EFS wells.

So looking at the extremes:
Pure Gas
420-470kboe = 2520000-2820000mcfg
@ US$6.60/mcfg = $16.6m - $18.6m
62% working interest = $10.3m - $11.5m
Breakeven would look to be about US$5.5 on a pure gas scenario (62%x2520000xUS$5.5)

Pure Oil
420-470kboe
@ US$95/bbl = $39.9m - $44.6m
62% working interest = $24.7m - $27.7m
Breakeven would look to be about US$32.5 on a pure oil scenario (62%x420,000xUS$32.5)

So adopting various scenarios and using the lower 420k EUR
guidance:
Oil Gas NRI POO POG $EUR
0% 100% 260,400 NA $5.50 $8,593,200
10% 90% 260,400 $71 $4.73 $8,504,664
20% 80% 260,400 $63 $4.20 $8,530,704
30% 70% 260,400 $56.5 $3.77 $8,533,308
40% 60% 260,400 $51.5 $3.43 $8,582,784

I couldn't find it but I vaugely remember the mix being about 70%gas to 30% oil - which would put it almost bang on the $60/bbl that Augusta321 mentioned

Feel free to push on my calcs - I only tinkered in excel briefly and I'm not 100% certain I got the calcs correct. Obviously no DCF/time value of money in here either.

But my rough conclusion is we're not losing money until the low US$60s/bbl as long as the production levels decline at or slower than the expected rates.