As I was saying...And this is just for Curtis, who I am sure will have something equally uplifting and pertinent to add to this discussion.
The costs involved with either doing virgin exploration, follow-up exploration or re-entry into pumped out oil fields is astronomical. Read the following and you will get some sort of idea just what the costs are. Pay special attention to the payout going to Denbury ($200 million) BEFORE Evolution gets to take thier royalty interest.Note that all this excitement is being generated by the fact that Denbury was able to take an entire oil field which was producing 18 bbls oil per day and turn that around in only THREE YEARS into three holes producing a combined total of 200 bbls per day. Wow, that is a whopping $15,000.00 per day.
How long is it going to take to pay off that $200 million at that rate. DO you seriously think anyone at ro associated with REV has the horsepower to pull off this type of operation? Nope, not any of them...unless REV has taken that $250k and simply bought in as subscribers into a Drill ing Association. Any of YOU could have done the same thing on your own.
Well, here it is...a day in the ife of the oil patch:
HOUSTON, April 5 /PRNewswire-FirstCall/ -- Evolution PetroleumCorporation (NYSE Amex: EPM) today announced that the operator of itsDelhi Field in Louisiana, Denbury Resources, Inc. (NYSE: DNR), reportedthat first oil production in the Delhi enhanced oil recovery project(EOR) began in March 2010. Originally, the partners had expected firstoil production to begin by mid-year 2010 following the initiation of CO2injection last November.
Gross oil production in the field for the last two weeks ofMarch averaged more than 200 barrels of oil per day from just the firstthree producer wells in the initial injection pattern. Denbury iscontinuing its multi-year roll out of the project by adding additionalproducer and injector wells and associated facilities in the field.Evolution owns 7.4% in mineral and overriding royalty interests and a25% reversionary working interest (carrying an additional 20% netrevenue interest) that reverts when Denbury receives approximately $200million in net revenues less direct field operating expenses.
From an engineering perspective, an oil production responsefollowing CO2 injection is a critical element in certifying proved EORreserves in our next reserves report for the year ended June 30, 2010.
Robert Herlin, President and Chief Executive Officer ofEvolution, commented, "The early oil response from our crown jewel assetis a major milestone achievement for Evolution and its shareholders,marking the beginning of cash flows that are expected to be verysubstantial to Evolution going forward. Our six year Delhi journeybegan with the purchase of a field with about 18 barrels of oil per dayof production, followed by our 2006 partnership with an outstandingoperator in Denbury and three years of their substantial investments.First production signifies the beginning of the project's rewards to EPMthat now moves us into a new phase of share value growth. Since ourinitial net production from the field is from mineral and overridingroyalty interests that have a very low cost basis, the associatedrevenues will fall almost completely to our pretax bottom line. Weexpect the resulting cash flows will allow us to begin acceleratingdevelopment in our other projects, including the Neptune oil project inSouth Texas, our Giddings Field properties, our artificial lifttechnology joint ventures and our shallow gas shale projects in EasternOklahoma."
I don't know about you, Curtis, but I just don't see the REV crew being very handy at all around the oil patch.