RE: v.buk is easy money!It will never see $50 from just drilling one well. That is a theoretical value if they were to prove up 250 mmbo, from many wells, over time without diluting their current shares further.
They currently have farmed out 25% for 37.5% of the costs of the first N. Piper well. If they can repeat that again, like they intend, then they would only be on the hook for 25% of the costs for the first well. That well is estimated to cost 8.2 mm Pounds Sterling or about US$16.5 mm + extra $ mm if they need to flow test. If the well is successful then there will need to be at least another 4-5 delineation wells to prove just how big the play actually is. You would be looking at least 2 years of drilling, interpretation of data and a ton of $ to do that as BUK’s drilling costs go up to 50% after the 1st well (US$10 mm/well - net total costs with flow testing).
For example from the time Oilexco started to delineate Brenda/Nicol to the time they brought both fields on together as 1 development OIL went from 50 mm shares (diluted) to 235 mm shares (diluted). That took 2.5 years and a bunch of equity financings, mostly though those manipulative goofs at Canaccord. And OIL’s wells cost ½ as much as N. Piper’s 1st one will. Now they didn’t have any production like BUK will have through Durango, but there is no way Durango can cover all the net costs of drilling up a successful N. Piper play. Unless you are only talking about drilling the Paleocene sands (if Piper sands are not successful in 1st well), as they are much shallower and will cost a lot less than drilling all the way down to the Piper sands.
If they could prove up 250 mmbo and bring it to production down the road then you would be looking at something near $50/share.
Also the 507 mmbo potential reserves are not stated as potential 2P or 3P by management. Or at least I haven’t seen it stated as one or the other. If its 3P then you can bet against it ever getting that big, even with a successful discovery well and delineation. Those 3P estimates never work out as the probability is only 10% or less. If management is using 2P estimates then you have a decent shot of 50% of hitting those numbers if all works out with the drill bit and the quality of the reservoir system is continuous throughout the structure.
Research Capital has N. Piper as a 1/10 chance of success (COS) overall.
IMHO, the Paleocene sand (65 mmbo) has a much better COS compared to the Piper sands (442 mmbo) due to it being more shallow (usually clearer seismic).
It will be interesting to see how it all plays out. But start looking for David Pescod (Canaccord) to start writing up about N. Piper non-stop as we near drilling. He will pump it hard and you should see volume pick up with it. He always does this with big plays. This is your typical high-risk high-reward play. No guts. No glory!