Where will the next 94 million of free cash go?Karr 40,000 boe a day
55 WTI
Karr is spewing off 438 million dollars with maintenance capex of 78 million dollars.
Every 1000 boe generates about 9 million in extra FCF
46 WTI
Karris is spewing off 336 million dollars with maintenance capex of 78 million dollars.
Every 1000 boe generates about 6.5 million in extra FCF
1000 boe/day
To Maintain 1000 boe of production at karr for a year costs roughly 2 million dollars on the production is online.
IP365 Karr = 1196 boe
So rougly speaking to ramp up Karr from 28,000 to 40,000 boe a day which the plant is capable only requires 10 wells to be added at the same time will maintaining product.
10 wells = 12,000 boe/day = 70 million dollars
12,000 boe/day maintenance = 24 million for year
94 million of additional capital is all that is requried for Karr to get ramped up from 28,000 to 40,000 boe a day
Conclusion
A 94 million in ramping up Karr and getting it to 40,000 boe is paid back in one year. Then it cost 2 million a 1000 boe to maintain production forever.
That is about 2000000 / (365*1000) = 5.5 a boe to maintain the resource.
IMHO