RE: RE: RE: That's enough for me! Basically I don't agree with that 30% number at all as the terminal decline rate on their wells. I am modeling 15% for the terminal decline phase. I think that is slightly conservative relative to their published type curve.
See the presentation dated 5/2012 here:
https://docsearch.derrickpetroleum.com/search/presentations/q/arcan/document/4/page/0/
Look at the type curves on slide 18. The terminal decline rate for the no waterflood case appears to be 12% per year as shown. If you model a 30% terminal decline rate, none of their published reserves values, NPV-10s, etc. would be even close to correct. A 30% terminal decline rate would drop the NPV-10 per well from $4.5 million to less than $1 million. All I can say is you should graph out your 30% terminal decline production curve in Excel and see for yourself what NPV-10 that leads to.
Here is a report from First Energy and they have NPV-10s listed for Beaverhill Lake on page 13. The middle case is $4.7 MM per well NPV-10.
https://www.investorvillage.com/uploads/57776/files/BHL.pdf
Perhaps you are getting that 30% based on the overall corporate decline rate in recent periods, but keep in mind we are in a situation where we are drilling actively so many of the wells are new and still on the hyperbolic phase of the production profile. Also, when they are putting waterfloods, pipelines, etc. online, it makes things a bit confusing trying to interpret the published well data in terms of decline rates. You don't know what was shut in when, etc.
By the time their production falls from the 5254 boepd average in Q2 (from a mixture of older and newer wells) to 4000 boepd average, I think the average well will be declining around 15% per year. That is a key feature of my investment thesis (the other being world oil prices remaining steady or increasing). If you have data to the contrary you should probably first short the stock as well as other Beaverhill Lake producers and then share your data with the board.
So anyway, at 15% decline, they need to replace 500-600 boepd per year to maintain 4000 boepd, so that's 5-6 wells, or $20-25 MM maintenance capex. So we really only disagree about the decline rate. Like I said, the specific numbers you use in your models are the key to the whole thing.