MGM Energy Corp MGMCF

Enhanced Recovery in shale

[OilEng]

The point about enhanced recovery is a good one.  The 6% number is primar;y recovery.  However, both Crescent Point and Petrobakken are reporting success with water flood and even gas injection.   Every extra 1% in recovery factor is another 70 million bbls for MGM and basically it is free oil or at a least very cheap oil.

Also check out Trilogy's Montenay oil discovery.  This is another Clay company.  The recovery factors they are claiming are 10% plus.  I am not convinced, but Shale Oil is still a science experiment.  Nobody knows how all this is going to turn out.  Shale oil is a revolution.  I am very optimistic, but revolutions don't always turn out well.

[SigmaKappa]

So when you say $10-20 oil; its basically the operating netback less the capital cost for each well. So your $10-20 is the potential pure profit for each well over its producing life?

[OilEng]

The $10 to $20/bbl figure is the profit as you put it.  It is more than the netback less the capital costs.  It also takes into account the fact that the wells will not come on stream for many years and it also give a 10% rate of return.  In other words it is measure of what someone like Shell might pay for the property before it is developed.  If they paid per barrel of oil