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No not really Vernony, its not like a big pint glass with everybody using straws and sucking at the same time. This is "tight oil" , whether its sand or shale, and the issue is you CANT get it out easy that's why the boom has happened through horizontal wells and fracking, its hard to get it out of the ground, so you need "unconventional " means.. Check out the Caza presentations , they reckon they can only get 5 % of the oil in place out of the ground. A "normal" or conventional area you would expect to get about 10 % - 25 % out. Which means there is a lot of oil still remaining in place which I think they will come back to later on with better techniques to get at it. If it was as easy as you suggest things would be a lot cheaper and production a lot higher. The other thing is that where you can drill on your own acreage is controlled by the license. If you check out any of the wells in an acreage you can see that they generally start about 300 ft from the neighbour's boundary, so you can't go pinching their oil by drilling close to their acreage.
... available under caza media and worth watching a confident WMF in action.
Cheers Orchy, a useful source but cagey not to give market sensitive stuff away. A good finance deal is worth waiting for.
hi Orchy , any particular insight for this . " I believe they are working to get a finance deal that not only gives them funds for the 2015 drill campaign but will remove/pay off the existing Apollo deal. " It seems logical and is something we've all wished for, is this your own inkling or a stronger nod from somewhere. Fwiw, imo the CW/Reeves County deal is potentially a game changer for Caza, although we wont know more until a minimum of 12 months time and then even beyond that to fully understand it.
tide , put simply Caza are not generating enough cash to finance the drill programme planned into 2015 so they will need more funding. The deal with CW to drill Reeves County will cost about $20 mill for 3 wells that need funding in 2015. There is no way Caza can or even want to be as big as Shell, its totally unrealistic . So yes the plan is to drill wells ,prove up assets and move on by selling the company.
Mr Egypt, Caza , like other Operators< are required to submit monthly figures to the New Mexico OCD, it is that site that provides the figures . So I'm not quoting from Caza, that should come tomorrow. There are many parts to OCD. For this link https://wwwapps.emnrd.state.nm.us/ocd/ocdpermitting/Data/Wells.aspx ,, under "Operator" " put "Contains " "Caza" and hit continue . This will bring up all of Caza's individual wells . Pick your well and click "view". On the right hand side click "production". This link https://wwwapps.emnrd.state.nm.us/ocd/ocdpermitting/Reporting/Production/C115BalancingSummaryReport.aspx?ogrid=249099 Gives the Summary balancing Report , i.e. the production , oil & gas, for each month . Note this is for Caza as Operator and does not reflect Caza's share which will be a lot less depending upon WI for each well. Its good for comparison one month to the next though. Sometimes these long links dont work if it doesnt I'll repost on
Orchy, I'm happy to share my thoughts on Caza, I'm not saying they are always right, but it makes up for some shares I have when others far more knowledgeable than I share their thoughts. Fwiw, the September production figures are out so I took a look. There is clearly a drop off in Caza's operated production in September, which for me was unexpected. A quick look seems to indicate that WC4 declined more than I thought, WC3 only produced for 19 days and WC1/2 also had larger declines than my previous very rough figures. There may be other reasons , I haven't looked too hard. If July was 1315 boed to Caza then my rough guestimates makes it the best month, and my overall average for Q3 about 1260 boed. The usual caveats for my guestimates, I'm happy to give them even if I'm way out , it provokes thinking if only for me and hopefully gets ball park expectations at a reasonable level. We'll see tomorrow.
Good morning, I had a busy day yesterday but here are some thoughts, I'll try to avoid repition and if I can add something new. Is obviously a great long term deal for Caza, so may not affect the short term SP. It’s not clear to me ,just exactly what Caza can get from each drill. Its states the deal involves 14738 acres NET, but for each drill it indicates for example that Caza earn 640 GROSS acres. I worked out that Caza would be paying about $3645 per net acre if they drill a 640 acre block. Caza get 75% WI per drill, if you apply that to the full 14738 net acres and Caza’s potential to get 75% i.e. 11k acres then that’s a $40 mill total cost. The key bit is that instead of doing a mega deal all in one go for $40mill , Caza has got access to $40 mill worth of acreage over many years if it chooses to do so, and can opt out if it wants to. A pretty smart deal which suits both sides and particularly attractive when they eventually come to sell the company. With regard to the acreage /drilling, CWEI have not drilled a horizontal in what they term “ the western flank of the company’s Reeves County acreage.” So there is an element of exploration risk here , hence the comparatively low cost per acre. The Wolfcamp is apparently deemed more productive than the BS in this area. The fact that CWEI are drilling the first well is key, and obviously something that Caza deemed important as there is little experience of drilling and producing from Wolfcamp . CWEI go first,share all the info from this well and others , Caza watch and learn before drilling on their own. Again not without risk but Caza appear to have minimised this as much as they could. The bit about 4,000 feet horizontal earns Caza 640 gross acres, and a horizontal of at least 7,500 feet earns Caza 1,280 gross acres makes sense. It indicates that some of this acreage is contiguous. Each 640 acre block is about 5280 feet long and therefore can sometimes limit lateral length if you go into your neighbours bit. So if you are operator of two blocks together you can drill from one block into the other with one well , saving money and getting twice the acreage for Caza. A 7500 ft lateral would be new to Caza but its been done elsewhere in West Texas. I also think this explains the range of well costs - $6.5 mill for a normal lateral , $9mill for a 7500 ft one.
IntraVnus, thanks for that , Concho are the company I look to the most to see which direction the Permian is heading, They do an excellent regular presentations on their site. Companies with good cash flow and access to cheap(ish) finance will be on the look out for bargain companies. I would add though that I think Concho are too large to gobble up Caza.
alphapig, there's the rub - the USA have legislation in place that prevents exportation of crude oil. Various companies get around this by "lightly refining" oil so it is a refined product or look to turn gas into LNG. I'm not well up on USA politics , but a number of factors are in play. There seems to be a consensus that oil exports will be allowed soon , probably after the November mid -term elections as there would be an electoral backlash if for instance export was allowed and the price of gasoline shot up. There is also an issue re the type of oil you get from onshore USA in that some import of heavier oil would still be needed , so it will never be a case of not needing imported oil. Oil is as much a political game as an exploration/production game.
heh heh Tide, there would be rioting in every US city if they were made to pay your $1.96 /litre about $9 a gallon. About 6 weeks ago I was reading people's comments on Seeking Alpha about how everybody from Obama to the big bad oil companies needed to get their act together as gasoline was getting too close to $4 gallon and it was outrageous. Its about $3.2 gall now say $0.7/litre , 45p litre.
Verony, I'm not sure what you are asking me , but all my figures in boed whether in relation to a well or Quarterly production are net to Caza and contain oil & gas. My Q3 guestimate is based on an average over 3 months trying to take into account declines from old wells plus new production that came on and also declined. Have a look at the RNS detailing Q2 results as it gives a $ "Netback" per boe, the price that they got for their oil and gas, definition of things like boe.
Verony, as Ozzy says Caza's Net Revenue interest in Broadcaster is 17.63 %, the other aspect is decline from peak rate.. e.g 2830 boed at peak , 1696 boed at 25 day average = 299 boed net to Caza. Simple maths dictates that if you have a peak of 2830 and an average of 1696 then your exit rate on day 25 is much less than 1696. This is not a straight line but a curved decline, so as a guess for practical purposes lets say day 25 is 1200 boed = 211boed to Caza. Whenever a new well comes on people make the mistake of adding the IP rate to whatever the last company production rate was , forgetting that that rate has declined and the new rate wont last long. On a positive note the 1696 boed 25 day rate for Broadcaster is very impressive given that not long ago the average 30 day rate was said to be about 600 boed. Effectively, Broadcaster with reasonable declines, should pay for itself in about 6 -8 months.
jmr re: any thoughts on " annual production has now grown to about 2,000 barrels per day," , mine are he's wrong, annual production is nowhere near that. We've never had a Quarterly production over 1000 boed, the last official figure we had was about 1315 boed for July, Q3 figure imo will average about 1250 - 1350 boed. On the other hand he's a highly paid analyst so wtfdik.
high Tide , as its Friday , your joke reminded me of a real life situation ; Mr & Mrs DT are in bed , both sleeping, early hours of the morning. Mrs DT : Are you awake ? Mr DT. " Well I am now ! . Why do you keep doing that, waking me up by asking me if I'm awake ?" Mrs DT in a huffy voice " Why do you have to respond so angrily ! I asked you in a nice manner and you answer back all nastily " Its now the early hours of the morning, we are both wide awake , MRs DT is angry with me ....... and its all my fault. . There is probably a moral to this story but i cant think of it ....... unless its" keep stum and pretend to be asleep " Have a good weekend all.
jolly , i too think you are, partly, wrong.While it would be foolish to believe that a low oil price doesn't affect profitability your ".my bet is that this (and other fraccing plays) are at the high end of the global oil cost curve..". is imo wrong. There is a lot on the Seeking Alpha site about this,and the general consensus is that the current three big onshore oil plays , Bakken, Eagle Ford, Permian have the best cost/ profit margins around in the USA. While cost margins are obviously not as good as say the large Saudi fields , there are many more costlier plays than the Permian,which I suspect is but cold comfort at the moment.
dj, yep they would have run logs over the vertical section before fracking, they just haven't said it. Occasionally if it is a 2nd , 3rd well they may just go in and not run logs but drill straight away to save costs, but unlikely in this case. It's nailed on that Lennox has hydrocarbons, the big questions are how much and how will it flow. Dont expect anything like the Broadcaster flows, but it is an important well for Caza.
Re my " I get around $4400 acre based upon paying about 30% of $7mill drill " , this is a net i.e. for 30% of 480 acres, if you were o compare with a gross acreage it would be 4400/0.3 = approx $14600 per acre, still a good deal though.
Morning Orchy, our posts crossed.
Nice to see the bits filled in. I get around $4400 acre based upon paying about 30% of $7mill drill , and while i haven't looked lately that seems a very competitive rate. That's an intriguing titbit about the first Marathon Road well ( 30 day av 1974 boed). I played about with some figures on OCd trying to guestimate the 30 day rate, which was difficult as it was split over 2 monthly figures. I guessed at 1750 boed with a view to thinking Broadcaster would be similar. Very early days yet but I would say that Broadcaster has come in better than the WC wells but not as good as the MR well. I hadn't realised "Igloo" was so close to Marathon Road, which has been far and away Caza's best non-operated well so far - 30 day 1974 boed means half the well is paid for in 30 days, with about 4 months to pay for the well. Potentially this is up there with the West Copperline deals in terms of being transformational /moving the company forward . There is also a "reputational" aspect here - Caza have stepped in , gained operatorship, brought in their rig and are about to spud to secure the license. That's the kind of company others will take notice of for dealing with in the future. its too early yet for Mr Market to realise the potential of E Marathon Road though, but it will come.