I posted months ago that ESTE had permitted a well in Cheyenne County Nebraska called the Rush Creek, but it looked like shallow 4000 feet stuff with a lot of dry holes all the way around it. They had contracted a rig, but then let the permit expire, which did not seem promising. Probably because it was a poor prospect and no partners would join them on it. These wells they want to drill now are in the same area, but deeper by several thousand feet. There was production in the 1950’s thru the 1970’s from a group of shallow wells about a mile from this current new location. Those wells were 4000-4500 feet deep, and some IP’s at rates of 50-100 bopd and lasted 15-20 years. Others produced 300-400 bopd for 6 months and were done. These are going to be relatively cheap vertical wells, maybe in the $1mm range, at most $2milllion. If they hit a 60 bopd well, the payout at $90 oil would be in a year or less. If they hit a short lived high rate well from a little pinnacle reef, then it’s a few months payout. Of course they may hit nothing too.
Of note is that in the adjacent county, Banner County, Black Star Petroleum from Australia has announced a big new discovery with millions of barrels of reserves. A lot of the details are still being kept confidential, but google Black Star Petroleum in Nebraska, and you’ll see the article.
My take is well costs in the $1-2 million range (gross), and rates in the 50-400 bopd range initially. It does not sound like they are looking for reef structures like the Niobra, but the seismic will help them spot traps, and faults, and avoid dry holes. I think the probability of success is like maybe 60%/40% they find something nice. Looks like Ray is a least trying to rip it. All of this is just my opinion or best guess, so We’ll see…….
Does not impress me at all - sounds like more whimsical fluff just put something out there. Ray has made other announcement with greater whimsy that also ended up like dust on a shelf.....just frustrating and keeps returning to bug the heck out of you. Sure they could get lucky with a low cost outlay and hit it big but my lottery ticket might come in as well right.....yeah sure. Right now all I want to see is an annoucement on a MAJOR HIT that transforms this company from a private one man holding company who takes home all the cash to one that is shared with..........the now forgotten............SHAREholders. Boolean
If this well costs $1-2 million, and Earthstone participates in only 45% of it, then this is not a big deal. It's probably less than $1 million of capital outlay compared to the $15 million or so capital they invested over the last year in the Bakken.
However, it might be a sample for them, if the cash flow is good, there is ample opportunity to expand in this area. I suspect it will be quite a while before the the results are made public.
Dreams are nice and all that but reality is this company and its manager has missed every BULL MARKET since its inception and that ain't NO BULL. For you to make a statement adding 20 million in retained earnings balance and feeling that makes the rest OK then you are not an investor in this company but more likely his mother or favorite aunt. Bottom LINE is what is important and to date he is taking home the BOTTOM LINE while I wait for results. Sorry - won't buy your answer. Boolean