The break even point for producing oil on Hemi’s leases is $32/bbl without the new fracting techniques. With the new fracting techniques he expects it to be $23/bbl. Anything above $23/bbl is profit, so if oil is $63/bbl, that’s a $40/bbl profit. This includes 37 different taxes, royalties, production/drilling costs, transporting costs, and discounted oil rates. In Keith’s last MN1 interview, he said they might produce around 3000 bbls a month in the summer. I asked him about that and he said it was a low ball number that he came up with. He hopes to produce a couple times more than that by the end of summer, but that it’s always best to give low numbers and to always exceed expectations. Weather is the big factor.
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