Production Profile from Recompletions of NM Shut in Wells Initial production will be sourced from mature, long life shut in wells from the Grayburg formation of New Mexico.
Historical recovery rates of 12% means that 88% of reservoir oil remains to be exploited by modern enhanced recovery techniques .
Permex has 68 of these shut in wells.
The second well of ongoing recompletions is well #6-10 which was successful and came online at an initial rate of 15 barrels of oil per day and now has stabilized at 10 barrels of oil per day.
The first well had stabilized flow rates of 15 barrels of oil per day
Management believes the production rates from this mature, long-life well, will continue with less than 5% decline year on year.
The remaining 66 shut-in wells that the Company plans to re-enter may have potential to yield similar results increasing the Company's total daily production solely by re-entering shut-in wells.
These are low cost, low risk production opportunities with atttactive Well economics of $35.86 US/ barrel in operating net backs at WTI of $65 US per barrel.
Based on the first two wells averaging 12.5 barrels of oil per day , with an annual decline rate of 5%, Permex Will average about 700 barrels of oil per day in the first year.
Subsequently, enhanced production technology will be applied to sustain and increase tertiary recovery rates.
So, over the next year, from these New Mexico assets, Permex is forecast to produce about 250,000 barrels of oil which , at WTI of $65 US will generate gross revenues of about $17.5 million US and cash fund flows of about $9 million US.
Converted to $CAD, these numbers become $22 million cad in Revenue and $12 million in cash flows ( the latter= $0.09 per share in cash flows ).
Currently, WTI is $101 US per barrel .
At that per barrel price, Permex will generate revenues of about $25 million US (= $32 m cad ) and fund cash flows of $ 17/million US ( = $21 million cad ) which translates to about $0.13 cad per share .
At peer average of 7.5 times annual cash flows, Permex will have a fair value based just on its recompletions of New Mexico mature well assets of about $0.65 per share at WTI of $65 US per barrel, rising to $0.95 cad per barrel at WTI of
$100 per barrel