The most important number is how many wells are drilled in 12 months. That will set the amount of new production being added from the buda. After that, each new well will mostly replace the production of the oldest well dropping off, adding only a little incremental production). Production would go up if number of wells being drilled increases every 12 months). With either scenario, eventually well locations are used up and the production decline is pretty steep in the next 12 months (no drilling, a lot of profit, but rapidly declining production to some much lower annuity level).
Right now they have room to run for 3-4 years at the rate they achieve in 12 months. (I would throw away buda because there was a long gap between that one and buda 2). Start the clock at onset of buda 2 production and see what is achieved in 12 months. From that point on it will be holding the production gains and looking to future opportunities. But there is a 3-4 year period with much higher productions and high profitablity because ythe wells are highly economic. In that 3-4 years there is lots of time for moly mine, uranium royalties, new plans on the texas acres, new oppoertunities. Let's just hope they take a breath and take advantage of this window of growth and profits and don't make dumb mistakes and pee the money away.
they hope to do something in 2015. They need more than a permit. They need a partner (to pay for it). There is a lot of environmental opposition. Still it is one heck of a structure.
Q 4 production should be 180,000 from Buda with total production of 280,000 and revenues 28 million (numbers I gave were for Q3)
Would add that all of that growth doesn't cost very much and pays off as they go. Figure 1.5 million per new well (a little high actually) and you have total costs of 18 million over the whole year (crimson only) to add 9 million in Q1, 12 million in Q 2, 15 million in Q 3, and 18 million in Q 4. So the get just over 50 million in revenues for the year 2014 from crimson buda program for expense of 18 million. I don't know of economics like that from any current drilling program in US.
Buda 1 - 1000 (3 months)
Buda 2 15000 (3 months)
Buda 3 20,000 (3 months
Buda 4 7,500 (1.5 months)
Wilkerson 5,000 (2.5 months)
Round that off to 50,000 barrels for Q 4 with revenue increase of about 5 million from the Buda. Might be a little conservative if Buda 3 is a super buda and buda 4 is somewhere between buda 2 and 3. But hgih end of estimate woudl be 60,000 to 65,000 buda barrels. That would add 6 million.
So production for 4 should be about a little north of 150,000 barrels (nice jump in 1 quarter) and revenue shold be 13-14 million.
Each quarter during year should add another 30,000 buda barrels so that by Q 4 production should be 150,000 from Buda and total of about 250,000 with revenues of about 25 million. That could be higher if they go to 2 rigs in the spring or if they get drilling time down to 3 weeks from current average of 4 weeks.
since they have one rig going, that means the last well they were working on is completed.
you should know that they can add an extra 1 BCF a day of unhedged production fairly easily, half of that by quickly ramping Haynesville.
The buda wells hold up for about 9-12 months, then drop rapidly to a quarter or less of the early production. So it is important how many wells they add in that first 12 month period where all the wells are producing at a good rate. If the get 12 wells going in the first year, that will add 60,000 barrels a month. Or about $15-$18 million a quarter in revenue. That should get them to a $50 million a quarter run rate by end of 2914 (Q4). After that, if they keep drilling one well a month, the new wells will largely replace lost production from the old wells, so revenues will flatten or at leats from only slowly (unless they go to drilling 2 wells a month). At some poitn they run out of locations and revenue drops off pretty quickly over the ensuing year - but that is 3-4 years away.
That is silly - they drill these buda wells underbalancd so as not to hurt the naturally fracked formation. So they all prodcue some o il during the drilling process. They sold over 6000 barrels in October - just don't know if that was for 10 days (okay) or for 28 days (weak). The story will be clear after the November full month production numbers from the wilkerson 1H well.
One of current directors. As mentioned separating job from CEO might help plot cleared direction. However also looking for new CFO. Wonder why they would do that if the goal is to sell the company. That adds some expense.But skill in that position can be very helpful - and Hooley can focus on operations, which haven't been all that smooth recntly. At least tehy are shaking it up a tiny bit - though a new CEO would have been a much bigger shake up.
Beeler 4H did average of 1190 bopd for first 30 days - that would be 35,700 barrels. So the 19,000 barrels for October should be for about 15 days. The November number should come out to just about 30,000 barrels. That should catch some attention and the well might be on track to be a super buda (150k barrels in 6 months). As importantly the well would have paid out in slightly less than 2 months. There are no other wells being drilled in NA with that kind of economics.
Beeler #3H (2nd Buda) Production thru October
18,000 barrels for first full month is a great well. Should pay out (takes 55k) in 3-4 months. Not a super buda however - that takes 150k barrels in 6 months. I am eager to see monthly numbers on buda 3 as that may be best one yet and could even be a super buda.
Will make LOTS of money in Q4 with cheaper feedstock prices. Especially the Illinois Wood River refinery that can process heavy oil and has been able to get that at discount for last several months.
They own legacy shares and they continue to award themselves free shares. But if they really see huge upside, why not put some of their real money here. Floyd Wilson and the HK principals do that, even if they do have their legacy and free shares.
Mystique is not the word I would use for the Larsens. This feels like a screaming buy based on clear growth path for 6-8 quarters. And highly economic wells that pay off in 3 months are the basis of that growth. Still astounds me that no insider has ever bought a single share with their own money. You would think they would buying hand over fist.
You are likely right. They have relatively clear sailing for 18 to 24 months if they don't do something dumb. And there are a few wildcards that could push shares to upside. (40 million for legacy uranium interest and maybe double that of they sell the Moly mine).
I have no specific idea why - is there news out there about the buda wells. Should have the buda 1 all quarter at lower rate (40 bopd) , the buda 2 and buda 3 all quarter at very good rates (maybe 150 and 175 bopd) , and the buda 4 for about a month maybe 50 bopd averaged over whole quarter) . Plus the 10% buda participation with the other operator for 2 months (maybe 50 bopd averaged over quarter). Add it up and they add about 400 and change bopd to production this quarter. That is conservative. And Bakken shouldn't drop by more than 50 bopd. So lets hope for 1500 bopd which is the first real increment in years. With 3-4 new buda wells every quarter next year adding to production.
All it takes is a calculator and a signed letter from Keith that they don't do anything silly for the next 12-18 months. They can just let this ride and spend their energy trying to monetize the Moly mine. They can look around for the next big deal, but SHOUD NOT pull the trigger on anything new for at least the next year as this is ampomg.