Detail 1, I believe there are (at least) two variables that need to be considered.
#1 Initial well production (immediately following flush-in) was reported at 68 BBLs per day. Wells traditionally settle in to "near" the level of the other recent wells drilled in the formation. Other nearby wells in the Squirrel formation pump 5-8 BBLs/day...BUT they haven't had the benefit of Craig's magic/voodoo or whatever it is he does to make the oil flow better. So taking that into account, I would say that after the first 45-60 days, the well should have a daily output of maybe 10-24 BBLs per day (2x to 3x better than the other wells in the same shallow (Squirrel)formation. That would make your number a bit optomistic against my numbers. And don't forget about the good effect it is having on the surrounding mature, reworked wells.
#2 Oil prices are going up daily, and the competition to purchase the oil is a factor too. So, over the year 2007, I would say that you could be $5-10 low on the market price of oil. (Good for us).
All in all, I think the Hemi-2 well probably pays for itself in 45-60 days (now that's a GREAT ROI!), and starts generating gross revenues after that to the tune of $600 to $1400 per day from there on out. That ONE WELL would add $178,000 - $427,800 to the gross revenues for each year it is in production. (Based on your figure of 310 pumping days...which may be low...but the other figures are broad enough to absorb it)
Since I don't have any real numbers, #1 and #2 are my assumptions (which I feel are accurate, but some may feel are too conservative). At any rate, start adding in a few more wells, and the benefits accruing to the re-worked wells, and it starts adding up to real money, real fast.
Although my estimate may be a bit more conservative than yours, we both agree on one thing for sure---what's not to like?
xtrapink
Per my other post, Hemi-1 NOI is filed with the KCC as of today with expected spud date of 2 May! Here comes the next one. Time to put on your Hemi Caps and root for another winner!
xtrapink
(long, strong and very pink)
AI
