GREY:STPJF - Post by User
Comment by
Eyeinvestoron Jun 25, 2014 6:41pm
328 Views
Post# 22694987
RE:RE:RE:Well Performance
RE:RE:RE:Well PerformancePeakOilBoy wrote: When exactly did the company admit pad 1 was finally a mistake? Details? Eye wonder if you talk to people eye don't? Eye seem to think you are confident about this.
Eye don't want to overstate this, so let me rephrase and say: Implicit in some of their comments are an admission that they made a mistake on the design of Pad 1. For example, they say things like, if we were doing it again, we would do it differently.
Meye view is that Pad 2 is a better guide to what McKay is capable of in the future with new wells drilled with pre-installed ICDs. Even Pad 2 pushed the envelope a bit and its possible that new wells with conservative spacing and ICDs could significantly outperform Pad 2 . Eye don't think Pad 1 affects the valuation of STP very much on the downside. Mr. Market has already more than written off the $70 m of capex that was invested in Pad 1. They have installed an ICD on one of the wells on pad 1. If it worked, that will be upside surprise. The market attaches 0 value to Pad 1. The value to an acquirer of STP in Mckay is based on the value of the reserves that can be extracted using a conservative well strategy, so they will be looking at Pad 2s production and largely ignoring pad 1. If a few wells on Pad 1 suddenly started working, that would be pure upside.