Confusion in the Oil + Gas Space ( Gas value in terms of $)
You see a lot of rah rah and the fan fare regarding big well result from a shale well with steep declines, but the same excitement does not exist when you drill a deep gas well that will produce for many many year with limited declines.
People look a boe's as a measure of production, but what they should look at is the dollars associated with the production, that ultimately result in the form of FFO + FCF.
It is much more economical to operate 116.66 mcf of Gas. or rougly 19,443 boe of natural gas, VET could likely average $17 Canadian a MCF in Q4 or about $102 a boe/Canadian. (In Q3 TTF gas was around 15 dollars)
AECO gas price still has not broken $2.00 dollars in Canada, so for every mcf of european gas you produce, you need to produce 8.5 mcf if you are selling at AECO.
So just on a cash sales equivalent bases in Q4 European Gas sales will likely be in the range of 19443 boe/day *102 *92 day = $182,453,112 just for European Gas in Q4.
To generate the same petroleum sales in Canada, with an average quarter price $1.80 AECO (generous), you would have to produce 183,000 boe/day of natural gas. Or approximately 1.1 Bcf a day.
Sounds like some pretty big Gas producers in Canada doesn't it. (ARX =1.286 BCF, PEY .638 BCF, TOU 2.554 BCF)
This shows the cash generation ability of VET production are the right end of LNG (receiving end).
The economics are likely even better than stated because you have to operate 8.5 times the gas volumes to get the same cash sales.
In Q4 I would expect roughly 30 million more from Europe Gas.
So you can see the huge value in European production, and I am expecting VET will have even higher FCF in Q4 even though oil has been soft, the Canadians dollar has been soft as well which is good for energy.
In north america VET produced 164 MMcf of gas daily, add that to the 1.1 Bcf equivalent production value of the European gas (1.264 Bcf), and it makes VET a major producer.
disclaimer - (made some assumptions, and subject to clarical errors)
IMHO
MHP