aussie small caps traditionally dont report them accurately as they are during clean up. they have to report something, and the less detail they report, the harsher the market reacts..
IP's are basically first 24 hr flow. and on a standard well with no frac, it makes some sense to look at them, but when its a well flowing back with enhance pressure from a frac operation and water and sand and all the gels/acids proppants etc in the mix.. its not a true indication of flow.
so they can do a few tricky things with IP's.. they can announce stabilised flow rates, and take a flow rate or surge of oil in a 2 hour phase, and then expand that over a 24 hr period and announce that to the market. ala AZZ in the early days in the efs. till i caught them out. you can make a 200 bopd well sound like a 1200 bopd well doing that ;-)
the other way they do flow rates is to announce a stabilised flow rate over a greater period and once the well has settled in, that practice is done by a lot of operators.
ok the flow rate wont be the massive hit you get on the IP, but stabilised is more indicative to well performance overall
but considerations needed to analyse these flows is critically- pressure and temp and choke sizes relative to completion liner, be it 5 inch or 2 1/2 inch or whatever..
what strike is deliberately doing is making it pretty much impossible to understand the well performance by pretty much taking all the key ingredients out of the equation..
hence the SP performance suffers..
you have investors loathe to place orders for the lack of disclosure. me being one..
then you have the problem of more experienced investors reading between the lines and reacting accordingly. perhaps exiting or reducing exposure due to lack of disclosure.
when in doubt, go without.
rexsh.. imho the well is not flowing at rates that will entice excitement, and are mediocre.. so to assume the flow rates will increase to any remarkable degree is probably not an assumption that will be prove to be. but i could be wrong.
imho they fracced the well like never before, and then sat on it, so it was not opened up for a week or more, which means the frac was set in to get maximum connectivity to the formation. so to assume frac stage failures is not in the equation as they really have gone to max performance for the frac design here..
when they opened it up they have gently brought it back, but as of a week ago it had returned 20% of the frac fluids..
well traditionally return about 10% - 40% of frac fluids, so its a massive frac, and expecting the formation to return all that means it must have whopping pressures down there. based on the relative low rate of water return per day, certainly not in the 1000's bwpd, i think the well is returning water slower than i would expect, and indicates perhaps the formation may not have the charge nor matrix flow pressure perhaps due to permeability or porosity reasons to flow at high rates
real early days, but the well is not ripping, not firing up like we see in other efs regions.. it doesnt sound like it has 3 flare towers and is flaring 100 foot flares day and night during clean up...
if strike disclosed the info on the well that makes it absolutely easy to understand and read then a far more honest reaction to the news would result, be it positve or negative
i view the lack of disclosure as slightly negative myself, and i feel perhaps thats why a "successful well" is not being read by the market as yet.
we will wait for more frank disclosure and i will always get the report on the well in any case as soon as its lodged with the RRC.. so if stx doesnt give the data i will pass it on.
all imho an dyor
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