The new agreement states that oil production between the First Tranche Oil, which is currently approximately 40 barrels per day (bopd), and a rate of about 150 bopd (reducing annually by 2 per cent) will receive a relative reduction of approximately 20 per cent in the overriding royalty paid to Petrotrin. Production above 150 bopd, which Goudron is already exceeding, has been granted a more significant reduction equivalent to approximately 45 per cent of the previously applicable rate at the current oil price, LGO said.
Garnheim I've also been looking at the fiscal regime in TT, haven't got very far because the fact we operate as a production sharing contract makes it very difficult to find reliable information. I would be particularly interested if anyone has a source for capital incentives or interest payments on capital by TT. They have some very good deals for offshore and deep land drilling, but, not so sure if any of these affect the IPSC. D
how long can OPEC sustain production at these WTI prices? Some say Saudi will be broke in 4months if prices continue to sit at $40 pb. Who will ride out the storm first. Wait & see ! This is making my stomach churn now !
No fears for LGO for me -WTI is the driver here, OPEC are likely do a turnaround at some point. World wide Short positions on oil are still strong, with minimal risk at the moment, however if the support at $40 holds, we could see a bounce off as positions turn to LONG. We are in the hands of the oil price for the time being, simple as that.
No short term cost fears for me -LGO is a low cost onshore operator, with sub $30 to break even point, which is about AS GOOD AS IT GETS, go compare :-)
No fears about finding oil for me - LGO’s STOIIP estimated by LR Senergy is in excess of 1.3 billion barrels and the Company feels there is considerable further upside on the contingent resources compared to those previously estimated.
No fears about current market for me -LGO are hedged on the BNPP barrels, so better net backing at hedge price of $47 WTI (while oil price is lower), whilst the remainder is directly affected by current WTI.
No Admin fears for me –costs of £2.7m in 2013 rose to £4.8m in 2014 INCLUDING one off court costs of 1.2m for MOG, looks like admin costs will very likely be substantially less next time! I expect admin cost to rise as infrastructure is also increased, it costs money to grow. Take £1.2m off £4.8m and it is more realistic and in line with our growing business. It is nowhere near as bad as some would have you believe imo!
No running cost fears for me -Someone posted last week at 800bopd we will be burning cash . At 1600bopd we will be looking closer to break even That was I think assuming admin costs remain at 4.8 mil , so knock off £1.2m and that picture looks a LOT, LOT better, not as bad as some would have you believe !
No long term fears for me -LGO’S work programme, already envisaged in the Company's business plans, will be carried out over the next 6 years to November 2019. The contract was also modified to clarify the process for extending the duration of the IPSC, with terms for an additional 5 year period to 2023 being mutually agreed and further extensions being possible :-)
No fears for me about the guys running LGO, the relationships we have with all the various parties or the Government relationship we have developed. No fears for me that they have all got it wrong as some would have you believe :-)
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