Have yall ever considered why it is that the previous owner of the 10% working interest in the Garcia#3 backed out of this deal? If these wells are as profitable as many believe, then why didn't the previous working interest partner make it a priority to stay in for more wells? Should it be this easy for a outside entity to waltz in & buy working interest if these wells are truly economic? Why were the owners of the other 90% working interest not fighting for the chance to buy into this 10% if the wells are worth wild...
Here are some of the answers that I have come up with from a geological perspective. The following points are based on my personal opinion. I am not a shareholder here, nor am I looking to buy into GRPR in the reasonably foreseeable future, though longterm could be a different story...
-GRPR's Jim Wells County working interest will be drilling a series of stacked pay sands (up to 16 pay horizons possible). When the reserves are totaled for all of these potential pay zones, these prospects appear to have fair reserves. But because of the nature of gas production, only a small percentage of these reserves will ever be extracted from these sands.
-In exploration, you always (or almost always) drill your prospects in order from greatest potential to the least potential. The Garcia#3 will be the 3rd prospect, so it is fair to assume that production rates will probably not surpass that of the Garcia #1 or #2. As I suggested in the opening paragraph, I do not believe that GRPR would have been able to enter the play if the first two prospects had been economical.
-These wells will produce low price natural gas for a few months perhaps 6 or 9 months before the well is shut-in for a recompilation while the working interest partners are hit up for more money to pay for a re-completion. The well might be shut in for only a few weeks or for many months in the event that a partner doesn't have the required funds & a legal battle ensues.
-After the delay, the well will be re-completed in the 2nd best sand, which will yield about 75% of the 1st sand flow rates & will only last for 5 to 6 months before it has been depleted. At this point, the working interests partners will be once again hit up for money to re-complete the well.
-Let's say that before drilling, GRPR estimated pay-out in 12 months (beak-even point from drilling /operating cost). 12 months into this well's production, GRPR will have only seen revenues from 8 months of production when they expected 12, so they have not reached their estimated payoff. Furthermore the well has now cost GRPR drilling cost plus 2 recompilations, way more than what was anticipated. GRPR is barely breaking even & might even be underwater in the well. At this point, GRPR will review their contract & realize that they have been had - they bought into a perfectly legal scam.
-Have you guys/girls checked out the website of the company who puts these deals together? I'm not going to call it a scam, but I will say that I would not do business with them. I imagine that they are the only party who will every prosper from these wells. via either collection fees from other partners for operating the well(s), by marking-up drilling /completions cost, or by seizing the working interest of other participants when they fail to pay for their share of the 2nd or 3rd re-compilation (this is their ultimate plan)... I would not be surprised at all if the operator saved a few of the choicest sand to recomplete after all their victims have backed out & they own the entire well...
This is all based on assumptions & guesswork on my part, but I'm pretty sure that I've got this right & this is what is going on with GRPR's TX wells... If you want proof, then all I have to offer is to suggest that look at that website (which I have forgotten) it has been posted on this message board before... The website has scam written all over it...
Please Note: I am not suggesting that GRPR is a scam. I feel that their California leases/reserves are with 10x GRPR's current market-cap, but I do believe that GRPR is in the process of loosing money on the TX wells. If it is too good to be true, then it probably isn't true... If these wells made money & were not a scam, then GRPR would have never been able to buy in this late in the project...
I am posting this message on Friday night of a Holiday weekend so that it will be long forgotten by the next trading day & hopefully any effects on GRPR's share price will be minimal...
One more note: I did not say that GRPR would go down because of this...
Good Luck with GRPR...
AI
