Thursday, September 29, 2011 3:13:47 PM
In your comments, you noted that the contract with the driller may be vertically integrated. You went on to say that 'vertically integrated' effectively means that Sonoro could pay the drilling contractor with oil instead of 100% cash. Presumably, this could be a mix of oil and cash.
Given the information that Sonoro has provided in the presentations and news releases, it seems that it should be rather difficult to drill beside the historic 1935 well without striking the oil that was found at that same location in 1935.
By mid-summer Sonoro apparently had about $7 million cash available. My understanding of the current Q3 drilling program is as follows:
- Build about 4 km of road to the drill site.
- Drill 2 wells, with a possible third well to follow.
I would hazard a guess that Sonoro ought to have something like $5 million left. At some point earlier this year there was some information that a single well would cost something like $1-$2 million.
If this is the case, I would think that Sonoro could pay cash to drill one well beside the old 1935 well and build 4 km of road for, lets say, $2.5 million. I can't imagine how it would cost more than $500,000 to build 4 km of dirt road in the desert....
Assuming Sonoro continues with the current burn rate, this might leave them with little to no money by year end. But, with an oil strike at the 1935 well site they should be able to pay the driller with oil in order to do the 2nd well, and possibly the third.
After all, if the estimated flow rate for well one is close to the 500 barrels per day that they have talked about, the drilling could be raking $35,000 a day (assuming $70 oil price). At that rate it should take the driller about 3 months to earn $3 million - a tidy profit/risk premium for drilling the second well and payment via oil.
What do you think? Is my idea as discussed plausible?
Admittedly, I am a new to oil & gas so please poke any and all holes into my idea.
Thanks in advance....
Recent SNV News
- Synovus to announce third quarter 2024 earnings results • Business Wire • 09/17/2024 05:27:00 PM
- Synovus promotes Chad Parramore to head of product commercialization • Business Wire • 09/09/2024 01:31:00 PM
- Synovus announces quarterly dividends • Business Wire • 09/03/2024 09:00:00 PM
- Synovus to participate at Barclays Global Financial Services Conference • Business Wire • 08/19/2024 01:00:00 PM
- Synovus awards Jack Parker Scholarship to 111 students for 2024 • Business Wire • 08/14/2024 02:12:00 PM
- Synovus names Darron Burnette as president of mortgage • Business Wire • 08/01/2024 02:00:00 PM
- Synovus promotes Blake Thrasher to Tuscaloosa market executive • Business Wire • 07/30/2024 01:05:00 PM
- Synovus announces earnings for second quarter 2024 • Business Wire • 07/17/2024 09:03:00 PM
- Synovus to announce second quarter 2024 earnings results • Business Wire • 06/18/2024 01:24:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/11/2024 08:18:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/10/2024 08:32:18 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/07/2024 09:28:47 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 06/07/2024 08:32:56 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 06/04/2024 09:21:28 PM
- Synovus announces quarterly dividends • Business Wire • 06/03/2024 09:00:00 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/21/2024 08:29:18 PM
- Form 144 - Report of proposed sale of securities • Edgar (US Regulatory) • 05/21/2024 08:24:50 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/20/2024 08:08:52 PM
- Form 13F-HR - Quarterly report filed by institutional managers, Holdings • Edgar (US Regulatory) • 05/14/2024 07:27:35 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/13/2024 08:23:09 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/13/2024 08:22:52 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/13/2024 08:22:18 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/13/2024 08:21:52 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/13/2024 08:21:25 PM
- Form 4 - Statement of changes in beneficial ownership of securities • Edgar (US Regulatory) • 05/13/2024 08:20:54 PM
Lingerie Fighting Championships Signs Broadcast Deal With Maybacks Global Entertainment • BOTY • Sep 26, 2024 9:00 AM
Maybacks Global Entertainment and Lingerie Fighting Championships Enter Into Broadcast And Revenue Sharing Agreement • AHRO • Sep 26, 2024 8:30 AM
North Bay Resources Commences Operations at Bishop Gold Mill, Inyo County, California; Engages Sabean Group Management Consulting • NBRI • Sep 25, 2024 9:15 AM
CEO David B. Dorwart Anticipates a Bright Future at Good Gaming Inc. Through His Most Recent Shareholder Update • GMER • Sep 25, 2024 8:30 AM
Cannabix Technologies and Omega Laboratories Inc. Advance Marijuana Breathalyzer Technology - Dr. Bruce Goldberger to Present at Society of Forensic Toxicologists Conference • BLOZF • Sep 24, 2024 8:50 AM
Integrated Ventures, Inc Announces Strategic Partnership For GLP-1 (Semaglutide) Procurement Through MedWell USA, LLC. • INTV • Sep 24, 2024 8:45 AM