dana here post by amstocks also
Re: 2011 - the Year in Review
>>>" TAG also successfully brought into production several Sidewinder wells and officially opened the small Sidewinder production station just south of Inglewood, which is already operating at its capacity of 30 million cubic feet of gas per day, plus as much crude and condensate as can be produced. " <<<
The story indicates that the Sidewinder facility is already operating at full capacity. From testing, Tag had estimated the initial production from each of the wells and that total estimated production came out to right about 30 mmcfg/d. The only test rate of condensate that was given before was for the Sidewinder 1 and the rate was about 5.5 barrels per mmcf. Which means that the amount of condensate is fairly small. Gas prices are about $6.00 per mcf with the price estimated to go up to $9.00 per mcf due to decline in gas production from major fields. But at 6.00 per mcf, the 30 mmcf/d of gas production is about $5.47 million in cash flow per day. Probably even a little more than that if they are selling the natural gas liquids separate. They will probably have some draw-down in pressure and some declines so by the end of the year, that could decline to 20 to 25 mmcfg/d. 30 mmcfg/d of natural gas is the equivalent of about 5,000 bo/d.
TAG oil probably decided to wait on determining the continued Sidewinder strategy until they had produced some gas to get an idea of decline rate and reservoir performance. If the well performance is good, then when they drill more wells, they will very soon have to expand the Sidewinder facility to handle more gas.
Another important question is what is a good well in the Taranaki basin? One way of answering that question is in the speed with which the well becomes profitable. A conventional well that would reliably produce 100 barrels a day pays for itself in about 14 months. A 200 barrel a day pays for itself in 7 months. A 250 barrel well pays for itself in less than 6 months. The 1700 barrel well - that one pays for itself in a just over 3 weeks.
The same question could be asked about gas wells. For a gas well, a 3 mmcfg/d well pays off in about 8 months. The sidewinder wells were all at least 6 mmcfg/d so they pay off in around 4 months.
For oil production, all the Cheal fields produced almost 50,000 barrels in December. In December, they would not have had production yet from some of the new wells. But 50,000 barrels is about 1,700 barrels of oil per day. I think they are capable of over 3,000 barrels of oil production with everything producing. Note: Tag's December presentation indicates that they would have an exit rate of 5,000 BOE (60/40 oil/gas). This matches my estimate of 3,000 barrels of oil production.
End of March production was estimated to be 6,500 boe/d. But with 5,000 boe (30 mmcfg/d) from the Sidewinder Facility, they currently could be producing around 8,000 boe/d. They may reduce production of some of the wells after testing at a higher production rate so they might not maintain 8,000 boe/d production. But at 6,500 boe/d or 8,000 boe/d production, that is a very impressive showing for Tag Oil.
