just talked to my friend warren in omahaHe said he got this call from this canadian drifter about a helium play that needs financing.
as he munched his dairy queen burger he took a look at the numbers.
the capital is 10.5 million. apparently this play will produce 5 million in revenue at a 50 per cent margin
so because charlie is in a good mood they ran numbers the number at 10 per cent interest.
so in year one, the well accrues a debt of a million bucks rounded off.
then in year two it accrues a debt of a million bucks and make 2.5 million so they put 500k off the main loan.
from year 3, accrues debt 950,000 and make 2.5 million put 1.55 milion off main loan.
patten contineus so it will take 5-7 years just to pay the loan off, no income to the company or the shareholders
also likelihood of additional capital costs in year 4-7 which is why I extended it out to 7 years
Warren finished his burger picked up his phone and bought more occidental.