somebody knew about this sideways well in Tennessee a couple of weeks ago they could have been making the price go down so that they could load up on the cheap. There is as much diversionary information as there is beneficial information.I bought more today.
Sentiment: Strong Buy
What a great thread! Thanks to all. Here we have a group of knowledgeable posters sharing, disagreeing and offering up their expertise for consideration.. Thanks O for starting, thanks all for sharing your insights. BTW, I'm still out but love the input, love the potential. How ironic if would be if TN turned out to be the game changer...
Right now Tennesse is the game changer. The payback is far better, the risk is actually less, and there is less competition because the majors are going for the big plays like North Dakota, Ohio, and Pa. This will probably be left to the smaller fish of which Miller appears to be the biggest in the pond, so yes, this is a game changer and may well see the Alaska project to the finish with far less wear and tear on the company. No worries about ifs, we are past that now.
The current plan is to have 12 wells completed by the end of the calendar year. With success on the next couple of wells I would not be surprised if the completion rate increases by adding another rig to the equation.
Extra rig = extra crew. Extra insurance, bonds, etc. I think they would rather stick with one crew/ site manager/ rig and support structures and just leave it at that.
Plus, you keep assuming every well will be a winner - the oil business is a bit more risky than that.
The Tennessee production will add dollars to the bottom line, and help finance the Alaska operation, where the majority of wealth is being created. It will also help boost the stock price by keeping the quarterly losses low, or even helping us to show a profit.
Sentiment: Strong Buy
I still think you are wildly optimistic. I think the declines will be very steep with year end exit rates ,but I do expect these wells will pay out in under a year.
We are talking about Miller after all. But they may finally be turing the corner but I'll reserve judgement until we see sustained results. It does appear though that they might be able to buy themselves a little breathing room by building up some production and cash flow.
I think the number is realistic.
Assume 125 barrels a day after decline from approximately 500 barrels
125bpd x 12wells x 365days x $95/barrel = $52,012,500
The second Tenn well will be a 20 stage fraq as opposed to a 10 stage fraq. Every 100 feet as opposed to every 200 feet. Would not be surprised if the second wells has a %25 or higher yield than the first.
On these kind of wells, the figure I saw was a 60% decline in the first 2 months from the IP and then 30% over the rest of the first year. However, Miller is choosing to run things more conservatively by producing at 50% of the IP rate (roughly) from the start and then reinjecting the gas to maintain the well pressure, these initial measures could change the first year figures a lot. Problem is I don't know until we see some history what this will do, but if Alaska is any indication, they may well be able to maintain that production throughout the whole first year and that would be a huge success.
Tennessee stuff is no doubt great news, but the loan aggreements with Apollo aren't being met. There isn't anything coming out of Alaska right now as projected. Those wells and acerage was cheap for a reason obviously. I'm still watching the stock but in no rush to get back in anytime soon.
Basically they were expecting the whole horizontal line to come in, but I believe that the pay they were hitting was about 80 vertical feet, I have to go back and read more.