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Eagle Rock Energy Partners, L.P Message Board

  • remd659 remd659 Aug 21, 2013 11:53 AM Flag

    Today's ome/one in las Vegas

    25 pages of super info.

    Sentiment: Hold

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    • This is Good on your view? "25% return on Woodford Scoop wells".

      The following is back of envelop. Well returns are based on incremental economics. Well economics must cover all fixed and semi fixed costs in the company. Their weighted cost of capital must be around 12% to 14%. Their overhead and other fixed administrative costs including cash distributions and interest costs not included in incremental economics must be around 9% to 11%. Their G&G costs not included in development well economics must be 4% to 5% which all would extrapolate to 25% to 30% that each well must cover that is not in incremental economics; so again a back of envelop extrapolation is a well return of 25% is breakeven at best to a loss per well. You can test this as they are only covering 65% of their distributions and their distributions are barely covered by their operating cash flow (adj for increase in net accts payables) or breakeven.

      "Partnership owns approximately 16,500 net acres in the South Central Oklahoma Oil Province
      (“SCOOP”), producing from multiple formations including horizontal completions in the
      Woodford Shale
      • Major driver of future liquids-rich production growth
      o Eagle Rock currently has interest in 84 producing wells in the Woodford Cana and Golden Trend
      areas; Q2 2013 average net production rate of 31.8 MMcfe/d
      o 28% production growth over last twelve months in the Woodford Cana and Golden Trend areas
      o Through initial learning curve and seeing reductions in drilling times and costs for the horizontal
      Woodford wells in the SCOOP; expect ROR of 25%+ on drilling economics at current NYMEX strip

    • Really? I saw absolutely nothing new.

1.740.00(0.00%)Oct 8 3:59 PMEDT