A voice of Reason from RavenGood posts Raven, this play is an interesting one but I agree it is a long ways away from allowing Legacy let alone Crescent Point or even smaller tinycap Bowood from building a company around it.
First a few facts of the real oil business around the cash-flow projections.
Contrary to earlier statements there is very limited infrastructure in place other than access roads anywhere near this well. What pipelines are around are shown as gas lines and even gas coop's which deliver fuel gas to homes on the reserves. This type of pipe does not help in moving water and oil around in the field so it will take considerable capital someday to build group facilities someday. Don't forget that every other ABB well drilled to date has featured much more water production than oil so there will be extra costs for hauling, treating and water disposal.
Now for the biggest joke comment of the entire board, that is the $14.6 mm cash projection. These wells if they are extraordinary will have IP rates of 400 bbl/d with a 80-90% decline in the first year AS ALL RESOURCE PLAYS DECLINE. Therefore from 400 bbl/d on the first day, it will end up at roughly 60 bbl/d after a year and even that would be optimistic. If you do the math on exponential decline, that profile in its first 365 days would actually produce an annual average of 186 bbl/d.
Now the true gross revenue becomes 186 bbl/d X $100/bbl X 365 days = $6.8 million at BWD 50% becomes $3.4 million. Take off at least 5% royalties, remember this is native land so the 5% royalty holiday may not be a given, and another $20/bbl at least for operating costs and your new FIELD OPERATING NETBACK looks more like 186 bbl/d X $75/bbl X 365 days X 50% and you end up with net BWD cashflow of $2.5 million.
If this is even remotely close to reality than BWD may be able to self-finance a development program without issuing equity but its very unlikely that they could keep up with Legacy in the success case. Legacy would probably hammer them with endless notices to the point where BWD would eventually sell at a discounted valuation just to keep a toe-hold on the play.
They are fracing right now as I understand including many truck loads of water coming into the lease for frac fluid. Based on all of the public data on other ABB producers this well in my opinion has a 10-20% chance of being all oil 300+ bbl/d, about 70% chance of having high water cuts and the remaining odds accounting for a ZERO oil probability.
Those are the facts as supported by the regional work underway. Good luck to BWD no doubt but this play is not a walk in the park, don't forget to keep your eyes open for the heavy promote which is underway on this stock! Buyer beware.