Selling CKE short There seems to be a consensus on this board suggesting that CKE maximum potential production is about 4,000 boe/d. This would be the same number CKE achieved when producing from less than 5 wells in Brierley in 2017. CKE now has 13 (11.23 net) horizontal wells - over double the number.
Due to egress and production restrictions over the last two years, these wells have been producing far below their potential capacity. It would not surprise me to find that at least half of them have been shut in since completion. To my mind, in estimating the peak potential production, it would be reasonable to use a combination of the IP 90 and IP 365 estimates. On this basis, potential production from the Brierley wells would be about 9,500 boe/d which is close to CKE own estimate of 9506 in their 2017 presentation. That said, Storm Resources, which operates close by, has been achieving better numbers than those forecast. To my mind, it would be reasonable to assume that potential number could be closer to 10,000 boe/d. To that, one could add the production from the 20 (?) vertical wells in Martin Creek. Even at 100 boe/d per well this would bring the potential total to 12,000 boe/d
CKE, of course, will not even be able to achieve anywhere close to this potential output in 2020. The reason being that, unlike all its neighbours, it has not secured adequate egress contracts to enable them to ship all their production - particularly to the Chicago market.
Never the less these potential numbers are important. It costs on average $4 million to drill and complete a well. Anyone of CKE neighbours - all of whom have prudently secured advance egress contracts - could be interested in purchasing just Brierley $45 million or over 20c a share.
So forget about whether the actual production number this quarter could be 3,275 or 4,000 boe/d. Keep in mind the big number.