KFG Resources Ltd. (KFG)

[JonnyRBuck12]

I was able to find the old Fayette page on KFG's website(link isn't attached anymore) and this shows that Fayette has a huge net back. Odds are that the Craig, Parker, Macneil and other leases are roughly the same as well. Even if LLS(Louisiana Light Sweet) was to drop to around $90 per barrel, KFG should still be getting close to a $60 net back. Like I said before, once Q1 and especially Q2 are out, this will change the revenue and profit direction of the company.

The other thing to keep in mind is the low decline rate of Fayette. Even thought KFG only has 75% interest now, production is still between 120-130bopd as per the Q3 results(Q4 doesn't specify). Sure two wells were added, but these are lower production and very low decline wells.

http://kfgresources.com/projects/p6faye.htm

As of December 1, 2011 the five Spring Hill wells produced stable production of approximately 110 BOPD. The Company owns 100% of the working interest (79.16% net) in the Spring Hill Nos. 1, 2, 5, 6 and 7 reverting to a 74.6% working interest (59.1% net) after payout of all costs of seismic, land, drilling, completion, taxes and operating expenses - currently about US $1,000,000. At a current price of $108 per barrel, the Company's net back after royalty, taxes and operating expenses is in excess of $75 per barrel. The No. 7 well opens up an additional offset to the south.