but I don't think the market understands what Canamax just told us in that last press release. Consider the following excerpts from the press release:
The newly drilled horizontal well was completed in the Montney B zone utilizing new completion techniques used for the first time in this area, which included an increased number of frac stages and reduced proppant volumes per stage. The horizontal well recorded an initial 30-day production rate ("IP30") of 247 bbl/day of Montney oil plus an additional 136 mcf/d of solution gas (total of 270 boe/d). These production results exceed the Company's expected IP30 type curve of 125 bbl/day of oil for horizontal wells targeting the Montney A and B zones in the Greater Grimshaw area.
The results of the fall drilling program provide support for 161 additional drilling locations for Montney oil (91 horizontals and 70 verticals) that have been mapped internally by Canamax in the overall Greater Grimshaw area. Of these internally mapped locations, 15 have been booked as part of the Company's independent reserves reports at December 31, 2014 and the remainder are unbooked locations (as defined below).
As a result of the current industry environment, drilling and completion costs have been significantly reduced, resulting in improved well economics. Canamax has calculated internally that, at a USD WTI price of $50, and using current USD/CDN$ exchange rates and oil differentials and an IP30 rate of 125 bbl/d of oil, a horizontal well payout is expected to be approximately 18 months.
KEY TAKEAWAYS:
1. The typical IP30 production curve for horizontals in Montney A and B is 125 boe per day. Canamax has figured out a way to generate an IP30 of 270 barrels per day in zone B and also expects horizontals to be better than 125 in zone A.
2. They have delineated 91 horizontal drill locations.
3. Canamax estimates payouts of 18 months at 50 buck wti, current exchange and differential rates ASSUMING THE STANDARD 125 boe IP curve. Given their actual well result of 270 boe per day being more than double this, the actual payout at 50 buck wti is 9 MONTHS OR LESS!
Assuming canamax can prove repeatability of this 270 boe per day across all 91 horizontal locations, what's this worth with these economics if oil prices rise to 60? People selling this at 30 cents fearing a major drop in crude are gonna feel stupid if they are wrong about the oil price or don't time reentry properly.
Zad