AMEP DD #4 ...for New Eyes:(#4 of 5)
DD re EST AMEP REVENUES based on WELL SPACING, and also est revenues when all the leases are developed by Wholly owned Bend Arch, OAG, and PRI.
I talked to the CEO recently about the spacing on the horizontals, which typically produce about three or four times the amount of a vertical in the Barnett Shale. He said it would not be 40, more likely 80 or 160. I am figuring on the conservative figure of 160, which will make this stock valued in dollars, not pennies, after the 7,000 is covered with horizontals at 160 acre well spacing. I am also figuring 2 wells(5%) down at all times for servicing, and re-fracing to return the production back to near the original volume, per numerous DD sources.
A spacing of 160 acres, yields 43 wells less 2 wells for servicing for a total of 41 full time producers. I am figuring $2M gross per well at a VERY CONSERVATIVE $9 for NG (+$13 now), $55 oil (+$62 now). That gives a figure of $82M annual gross revenues from the Bend Arch leases alone when developed (on the conservative figure).
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That does not count gross revenues from the 193 PRI existing well project, which will be substantial when the project is completed, and that should not take all that long now that the technique has been established, because drilling is not involved. I am estimating that 154 of the 193 wells will be producers, as one in five wells will be used to enter the HOA-800 treatment into the formation. I am figuring 7 wells (+5%) will be down at a time for servicing, leaving an average of 147 wells producing at any time.
The recent announcement, is that the HOA-800 treatment has been achieving as much as a 500% increase in the oil production from the 12 well test as of August.
It looks like CB will achieve his quest to bring AMEP to profitability with the help of PRI now that the program is finally going to be expanded to the existing 193 wells and working pumps program ...and fast, as no drilling is required.
This announcement finally gives us data to make some meaningful projections. Figures based on current well production spread over 12 wells gives sufficient average data for making estimated projections based on 12 well producing 987 barrels in 31 days. The average is 2.65 barrels per day, per well.
Now the program will expand to another 25 wells in the next 45 days. That will be a little better than a +200% increase in PRI wells in production in just 45 days. In 45 days the total HOA-800 treated wells will be 37. That gives 37 wells X 2.65 barrels X 30 days X $60 per barrel(what PRI got on last load) = 2,941 bbl X $60 = $176,460 per month from RPI only. That would be $529,380 gross revenues per next Quarter from wholly owned PRI ONLY, for 37 of the 193 well program. Note; one in 5 wells are used to inject the HOA-800 treatment. Figure a max of 154 producers.
Est Gross Revenues from PRI when field is completely treated:
Like I calculated, PRI has a net of approximately 154 producing wells of the 193 total, when the entire field has been treated. As one in five is used to inject the treatment.
154 wells X 2.65 barrels per day = 408 barrels per day PRI
408 barrels per day X 30 days = 12,240 bbl per Month.
12,240 X $55 (conservative) = $673,200 per month PRI
$673,200 X 3 Months = $2,019,600 per Quarter PRI (ONLY!)
$2,019,600 X 4 Quarters = $8,078,400 Annual gross Rev
That is over $8,000,000 from PRI only.
This MC and SP is so undervalued, the hard figures say so.
Profitability for AMEP is approaching fast.
Wholly owned Bend Arch will do even better, ...the NASH 1-c was not in the last Q.
AMEP longs, IMO the dynamics have really changed at AMEP with the big Ideco Rig acquisition, .....and now the 193 existing well PRI program will spread until the entire field has been treated. That is big news for Q increases in sales of Oil and NG.
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Production Resources, Inc. posted significant oil production increases after several months of testing various procedures utilizing AMEP HOA 800. PRI discovered a method of well treatment that combines the utilization of heat along with AMEP HOA-800 in a chemical process that has returned positive results. PRI has increased oil production from the Olmos formation on the 12 test wells by as much as 500% for the month of August. Plans are being implemented to expand the testing area to an additional 25 oil wells in the next 45 days. In august PRI produced 987 barrels of oil at gross sales of approximately $55,000.00
Charles Bitters, President of American Energy Production, Inc. stated, "This is the best month for oil production and revenues that PRI has done since AMEP bought the Company. PRI has been working extremely hard on achieving the desired results with AMEP HOA-800 and now believe its time to start expanding this treatment program. There is still room for improvement, but I believe PRI can now benefit because of current record high oil prices and increased production rates from the Olmos heavy oil sand field. This oil field is very difficult to produce because of the tight sand and the compaction of the heavy oil in the sand; still these are very exciting results."
Management cannot discuss the details and/or formulations being used with AMEP HOA- 800, but PRI believes the heat treatment once perfected can possibly be sold to other oil operators. The Company will keep investors informed of the expanded test results.
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THEREFORE in conclusion on TOTAL est O&NG gross revenues:
My estimated total gross revenues for the 7,000 acres + 193 PRI well project, totals $82,000,000 + $8,078,400 = $90,078,400 gross revenues annually for AMEP.
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That said I really believe energy prices will continue to rise over the next several years, with HUBBERT's PEAK production world wide at hand; and China, India, and South East Asia gobbling up energy in order to fuel their growing economies. If that happens the above estimated figures are calculated too low.
You must also consider that CB/CEO will be adding Barnett acreage as the company becomes profitable, ...as CB will grow this company.
All the above IMVHO, and are my VERY CONSERVATIVE estimated figures on $9 NG and $55 Oil, you may want to adjust upward to reflect todays prices, and projections for this winter.
GLTY all AMEP longs.
... %^ greeneyedhawk "GOT GAS?" Get AMEP for relief ;^)
