RE:it going take another year for operationJust so you know, they are treating this like a mining operation.
typically you do have a startup period where you dont run at full capacity. Typically it is a ramp up process where you start at 30-50% of full production and ramp yourself up to full production over a period of time.
at full production, the breakeven point by my calculation is just under $50 per barrel.
at startup production, I'd have to run some numbers, but I'm thinking at least $60 per barrel to breakeven on operations (maybe higher)
so the plant will likely operate at a loss in the first quarter. Depending on how long the ramp up process takes we may breakeven in the second quarter, and look at profit thereafter.
the current projection is $55 to $60 oil by the fall. Assuming those projections are close, then I think we can look at profits by next spring.
This all hinges on two assumptions:
1) that the technology works.
2) that the oil resource is commercially viable.
based on the extensive testing, I'm reasonably satisfied that #1 will be okay.
the recent report that they posted along with news of the consolodation and rights offering suggests they feel that #2 is okay too.
so really what we want to look at is stable oil prices.
even if break even is less than $50 as I saw Mr. Todd say in an interview a while back (my estimate is $48 give or take a couple bucks.) I really want to see at least $55 oil before starting production.
we want to make some money, not just break even.
I know some are criticizing the delays in bringing us to production. I, for one, am happy we didnt rush it.
at 2000 barrels per day at a cost of $48 to break even, the sub 40 dollar oil would have cost us all a lot of cash. ($16-35k per day by my calculations.) Which makes me think this 'issue' with getting the plant done on time was not an issue at all. I think they just didnt want to come online and lose a pile of cash.
I'm fine with that. and with the current projected price in the fall being higher than current, It looks like a good time to ramp things up.
so lets all hope that oil continues to go up in price so we can make a little money here.