Workover costs on one Bakken well cost the company $2.5 million in the second quarter. This must have been the Brad-Olsen 9-16 #1H well, since it was off line for almost three months. This is almost as much as the company spent to drill and frac this well.
The well is back on line and hopefully this is an isolated screw-up by Brigham. The entire loss in Q1 is from a combination of this well and the hedging losses. USEG would have had a small profit otherwise.
Unless oil surges past $110, USEG should have minimal hedging losses going forward. According to the 10Q as of March 31 USEG added no additional hedges.
With the bump coming in production from the Bakken wells and the Petroquest wells, the second quarter is positioned for a significant upside surprise in revenues and earnings.
• During the three months ended March 31, 2011, we received on average $2.2 million per month from our 19 (6.37 net) producing wells with an average operating cost of $291,000 per month (excluding workover costs), production taxes of $227,000 before non-cash depletion expense, for an average cash flow of $1.7 million per month from oil and gas production
(Unaudited) (Amounts in thousands, except per share amounts)
For the quarters ended March 31,
$ 4,883 2011 1st QTR
$ 7,709 2010 " "
How does one go from 2.2 Mil per month to 4.9 Mil for a Quarter?