WISR Ltd V.WZR

RE:RE:RE:March-April a turning point for WZR

[TangoPrince]

CF, I believe my estimation of $100 mil per year (from Sarqala and Hazira alone) on a run-rate basis is fairly accurate.  I’ve detailed my calculations below and you will see line items for royalties, cost recovery, and WI.  Most of this can be found in the corporate presentation on page 27, however I had to pull the operating expense of $12 per barrel from one of the analysts’ spreadsheets. During the time when there are still costs to recover and the R factor <1, the calculation below should be reasonably accurate.  Since my goal here was to show how much cash flow the company will be generating for each 5000 barrels it produces, over the next 24 months, I do not need to adjust the R factor.  Therefore, profit sharing should be 65% KRG/ 35% contractor group.  The idea was not to provide a discounted cash flow analysis, therefore no discounting is necessary.  The idea was to show how much cash is generated when Sarqala (5k to 10k barrels per day) and Hazira (5k to 10k barrels per day) finally come online – hopefully by summer of this year.  As mentioned in my first post, which outlines my bullish case for the stock, this number could realistically be as high as $100 mil per year.  Please see calculations below:

Gross annual sales on a run-rate basis:
5000 bpd x 365 days x $85 per barrel = $155.1 mil

Calculation of percentage to contractors as a group:
90% of $155.1 mil = $139.6 mil    (to account for the 10% royalty to KRG)
45% of $139.6 mil = $62.8 mil      (goes to contractors as "cost recovery oil")
35% of $139.6 mil = $48.9 mil      (to account for the 35/65 split of profit oil between contractors/KRG while R factor<1)

Profit oil to contractors for each 5000 bpd produced:
$62.8 mil + $48.9 mil = $111.7 mil annual run-rate  (while cost-recovery is in place)

WZR portion of profit oil:
40% x $111.7 mil = $44.7 mil annual run-rate to WZR
 
Total well operating costs (not including corporate overhead, depreciation or depletion):
5000 bpd x 365 days x $12 per barrel = $21.9 million  (this comes from an analyst covering WZR)
 
WZR share of the above operating costs:
$21.9 mil x 40% = $8.8 million
 
WZR annual run-rate cash flow for EACH 5000 bpd produced WHILE cost recovery is still 45% AND the R factor <1:
$44.7 mil - $8.8 mil = $35.9 mil
 
So, if Sarqala and Hazira produce 15k bpd combined, the company will have 3 x $35.9 mil = $108 mil in run-rate cash flow per year.