was about 1,600/day skewed by the Lloyd well. If you project out the completions for April thru June (BEXP & Zavanna), what would you project as the end rate at 6/30 ? As you know, there are two flow rates to be concerned with : actual (though volatile) & long term recurring (LTR). LTR rate is where the value is & management indicated it is about 1,200/day.
Projecting out the year, it would be great if USEG could get LTR to 1,600/day.
OT : look at AMZG : should be interesting to you.
Management shouldn't waste their time pushing CXPO. What they should do is find a partner for the Montana Bakken acreage and then find a new opportunity to drill in the Eagle Ford.
The Montana Bakken acres may or may not be economic.
The south block of the Eagleford acres don't seem to be that promising.
The north block of the eagleford acres MAY be a little better, but that is based on half a lateral.
The Brigham acres and the Zavana acres are highly economic, but they sold most of their remaining interest.
The Cirque wildcat in Kern County was a duster.
The acres in SE Colorado did not pan out (one operated duster).
They are still thinking maybe they can operate something like the Montana acres themselves and even develop it. They shouldn't think like that.
They can operate an apartment complex and get some monthly cash flow. They can't sell an apartment complex.
It is not yet certain if they can bring the Mt. Emmons project to permitting stage, while it is certain it will take a lot of money to try to do that.
It is not certain if they can sell Mt Emmons or find a JV aprtner to develop it.
It is certain they do not have the resources to front huge up front costs for years to get a Moly mine to the production stage.
The K.M. Ranch #1 was still free flowing two weeks ago after 7 months.
Buda, Buda, Buda, Buda, Buda! GDP has drilled Buda wells 20 miles to the East for $4 million with 600 BOE EUR's. The wells were over 60% oil/liquids.
Ed is the CXPO expert. Maybe he could update the February production from the K.M. Ranch #1 and Beeler and find out from Crimson IR about when the K.M. Ranch #2 will be fracked.
If they have acres where they can drill oil wells with EUR of 600 BOE (Buda or any other source) for $4 million dollars, then we have nothing to worry about.
There will be pudding for all. Those would be even better than prime oil window Eagleford wells which are likely the best thing out there right now, and a LOT better than Bakken economics, which are not shabby either.
Margin, they had 5 wells drilled awaiting completion when they sold 75% of the Zavanna joint-venture. They kept their original interest in those 5 wells.
The two wells completed in March have a 20% average working interest. So will the two Zavanna wells they plan on completing in April.
You are right - they did keep the original working interest in all the wells that were in process. That should add some to their production base.
The way things have been going down south in Texas (eagleford with Crimson) I do wish USEG had kept all their interest in the Bakken acres. Though that might change (improve) with the data from the KM-2H well, when they get around to completing that well. And hopefully they will get a rig drilling continuously in Texas so they have a stream of new wells coming along - if they can find a good spot in the Eagleford (the north acres?) or else tap some of the other formations on their leaseholds with good economics.
The 1,200 BOE pd was before the Kalil and the Lloyd well. USEG had completed 23 Bakken and Eagle Ford wells that accounted for 1,050 BOE pd. The rest was from the natural gas wells in Louisiana and Texas. While each Bakken/Eagle Ford well has a different working interest and initial flow rate, they are averaging 45 BOE pd once they stabalize net to USEG. The two new Brigham wells and four coming higher working interest Zavanna wells should add another 270 BOE pd longer term, and a lot more short term for a big bump in second quarter production. This gets them to 1,470 BOE pd.
Then add the K.M. Ranch well, the three lower working interest wells coming with Brigham, and the three additional lower workiing interest wells already drilled with Zavanna and you are at 1,600 BOE pd long term by this summer. Even if you assume the new rig with Zavanna doesn't materialize, that Brigham doesn't drill any additional wells, that Crimson doesn't drill any additional wells, and that USEG fails to get in on any other wells anywhere before year-end, they still will exit the year at close to 1,600 mature BOE pd.
Zavanna has told USEG they are contracting a new rig through May 2013. There is no reason to doubt this will happen and USEG will drip production higher throughout the second half of the year.
Keith still has $20 million to allocate to an oil investment to drive year-end mature production over 1,600 BOE pd.
New Zavanna wells are at 25% of the 25% they formerly held (average). That means 5% interest, which won't do much more than hold Zavanna cpmponent pretty flat (even the mature prodiuction slowly declines). can't build a base on 5% participation with one rig.