RE: RE: high debt a problem??? This is my understanding:
Water-flood is being done to add low cost production and cash flow. It happens that it improves decline rates on the producers.
The decline rate is the decline rate. Within itself it cannot be managed, although it can be mis-managed by flowing too much oil too quickly and reducing the pressure rate in the reservoir. Its impact can be managed by slowing down development relative to older wells, resulting in a gradual lowering of the annual average decline rate. Thus the lower capex for 2013.
The curves on the PRY wells are very steep but very long lasting. Wells are paid-off in one to three years. After the payoff the net cash flow is free cash flow to the company. The company has been drilling since 2010, so gradually more wells are producing free cash. The recent Dundee report points out that the company will start throwing cash above its replenishment capex in the near horizon (2014). As that happens it could consider a dividend, escalating internally funded development, paying down debt, or acquisitions.