Healthy Place (350 Million in Adjusted Funds Flow)Magic Number for POU would be this
$54 WTI dollar Oil - $55 U.S. dollar condensate
$3.50 Canadian Gas, 2.69 U.S.
$20 NGL's
Exchange 1.3
This would generate north of 2.50 a share in (FCF) not really FCF but adjusted funds flow for accountants.
Karr
At 7 million dollars wells, and IP365 of 1126 boe/day at Karr they can add 1000 boe of production at Karr for roughly just a little over 6 million dollars.
Every 1000 boe in the above healthy place of pricing will add 4.2 million dollars in yearly FCF while still taking into account Maintenance Capex. At $55 dollar condensate, you get like 70% of the capital back in the first year, and now your have that revenue stream forever.
Real Economics Karr
To maintain 25,000 boe at Karr, requires 7 wells to address declines years at 7 million a well roughly 50 million dollars. So it is 2 million a year to pay for declines at Karr.
1 Year (First Year)
At Karr in the first year for every 1000 boe's you add, you would get 6.2 millon dollars in New FCF, and the well would be paid for entirely. (1 year payback)
After the 1st Year it costs you 2 million a year to maintain every 1000 boe of anual production, at Karr, Karr is a cash cow.
Adding 10,000 boe to Karr Production
In the first year it would require the adding of 9 wells, these 9 wells would cost approximately 65 million dollars. The would FCF in the first year not counting maintenance capex 62 million dollars. Then that 10,000 boe would free cash flow 45 million dollars a year for 25 years with maintenance capex taken into account.
If would not be surprized that POU adds on more $55 U.S. condensate hedges and ramps up the production at Karr and Wapiti.
The Break even price while maintain production is $38 dollars U.S. for POU overall. These number include all of POU production in terms of returns, and the maintenance capex of 2 million per 1000 boe is Karr specific. (Roughly 40-50 cents a share in FCF)
IMHO