RE: RE: bottom? Thanks for the summary, its somewhat cathartic to write it down. Hope it helped.
Can you explain how you link decline rates, finding costs and net backs. I can understand finding costs and netbacks being linked into the recycle ratio, but how does the decline rate enter in to the calculations.
Also, on the finding costs, I understood that the company has been focussing on development drilling, as opposed to delineating the play. This suppresses the addition of P and 2P reserves, but keeps net backs high. So finding costs ratio to reserve additions are high, as are net backs. Since the company "knows" the oil is there, this seems to be the best way to develop the play with the lower capital efficiencies.
This could all be helped once the increased well density (8 per padd) and/or the increased recovery from water-flood enters into their reserve calculations. It may be too early for Y/E 2012.
In the meantime, net cash flow is everything, and it continues to look solid. This was the headline story from the Oil Bulletin yesterday:
Prices for light sweet crude paid by Canadian refiners Imperial Oil Limited, Royal Dutch Shell and Suncor Energy Inc. were up for a second straight month in February, gaining 95 cents to average $88.29 per bbl compared to $87.34 a bbl in January.