well yes. People need to start punching out the figures on their calculators and work out just how must money PSA is going to make.
If the new platform does on average 20mcf a day, and at $6 gas per unit less 0.35 distribution charges etc, that equals US$113K a day or US$3.4M a month NET cashflow for them.
If this platform cost US$8M to complete, and the exploration cost another US$8M (I am guessing at this figure), well the US$16M gets paid back in just under 5 months. After the end of those 5 months, the remaining production is pure profit.
According to the annual report on pages 2 & 3, Vermillion 258 #2 which had 42 feet of net gas pay had a9bcf of gas as estimated recoverable gas. If the #1 well had 85 feet, a fair guess would be this well had 10-15bcf. If they are producing 20 mcf a day from this platform, and say both wells have 20bcf of gas, well that is 1000 days of production = US$113M of net sales over the life of this discovery. That is a heck of a lot of money.
Fundamentally these are still good buying.
PSA Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
