RE:RE:East West's Cheal well intersects 9 m of O&G sands
Hi! The number of potential drilling targets was mentioned in the press release in January of 2014 so this is nothing that haven't been said before.
What is far more interesting in my eyes is if the 9m of paydirt are economic as the mentioned "sands" and given that E3 is failure due to tight sands I am not sure if E6 will add production.
E2 is uncertain as well. No news since September do not indicate that this is something with high prospects.
G1 seems still in valuation so not sure if we will see any notable production from this one any time soon if ever.
Summing up:
1) 3 wells are producing. 4 (E3, G2, G3, SX1) were failures. 3 are uncertain at the best.
2) Declining oil prices tighten their netbacks
3) In around 2 weeks we will get the results of the next bid rounds.
4) With current production and assuming netbacks of $30/boe they should be able to cover their g&a and some share buybacks.
5) with around 8mio in the bank the have around 5 more shots (incl. E6) to hit as I would assume around 3mio are earmarked for the east coast work commitments.
6) Romania will need to see some drilling done by NIS Romania (which is an european comany and therefore should not be affected by sanctions) to see if holding on to our lottery ticket was worth it.
I am far to overloaded with EW shares and trying to view things a way that I assume realistic is not funny. If they fail on the 3 remaining wells in NZ I amnot sure how they will be able to organically finance a lot of further drilling on the West (maybe up to 5 wells) and forwarding the properties in the East. At current oil prices of course.
If they are able to get their production to 400-450boed and netbacks return to $50-55 this should transfer in around 7.5mio a year which would mean the should be able to get around 5 mio to work each year.
And we can al forget about the production in NZ if NIS finally gets some drilling done and hits paydirt.
I have to admit that my expectations were too high regarding the economics in NZ and the pace in Romania. As I do not have gains for taking the tax loss on this one I am holding and hoping that we will see some good news out of Romania in H1/2015 now that the newsletter that pushed the stock has put it on sell...
Just my personal thoughts. DYODD
carinthian