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Abraxas Petroleum Corp. Message Board

  • bogwa1406 bogwa1406 Mar 17, 2014 5:45 PM Flag

    FYI...AXAS boepd isn't a run of the mill boepd. Almost all E&P's report production guidance in boepd but it matters

    greatly in understanding what comprises the boepd. Let's look at what the Blue Eyes IP means in valuation if you don't understand the boepd composition. You could have a 1000 boepd which is 100% oil (1000 bopd) or a 1000 boepd of natgas. The conversion of natgas is 1 boe = 5.61 mcf or 1000 boe = 5,610 mcf so what's important to know about that ? Well, a 1000 boepd of 100% oil at a nominal price of $80 a barrel = $80,000 a day whereas a 1000 boepd of natgas = 5,610 at a nominal price of $4 per mcf = $22,440 day. Blue Eyes came in at 94% oil using the 30 day IP rate...divide the boepd by the reported bopd to get the percentage. After putting it on sub pump it still came in at +93%. From some digging I did today back in the 3rd qtr CC where they discuss why they went to Wycross instead of going to the Cave prospect ..Bob discusses the Camaro wells and to me he eludes to the Dutch 2H well being anticipated to be similar to the Camaro wells which both yielded 93% oil. What's the 10day IP rate on the Dutch 2h ? +1000 boepd....so the question becomes is that a $22,440 a day producer or is it closer to being an $80,000 a day producer...I'd venture it's gonna be knocking on the door of the larger. Granted IP rates decline...the IMPORTANT factor is what is in the numbers and these 100% working interest wells aren't just cranking out good IP's....they're cranking out +90% oil cuts. When you start crunching numbers there's a big difference in what a boepd is composed of....$80,000 for pure oil versus $22,440 for pure natgas using the nominal prices I used. $57,560 valuation difference. I believe that's about 1/2 million $ every ten days....IT MATTERS. So no matter what E&P's you invest in..do some DD..find out what that boepd is comprised of and also look at what they hedges are on the various components...and you won't get caught off guard and not knowing why you made $$$ or lost $$$. JMHO..GLTA per Bob " cusp of significant production and cash flow"

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