Well, no kidding. VET talks about a $9/boe SG&A. Well, no s**t, when you now have a 5,000 boe/d production capacity, but are producing 1,700 boe/d.
Simple math (and it's never that simple when infrastructure is in short supply, but...) says that at 5,000 boe/d, SG&A falls to $3/boe. Which ups netbacks by that measure alone by $6/boe.
Add-in the bankable value of this production, and bank lines will probably be raised to around $20m. Giving scope to continue the program for the rest of this year.
VET may have left this purchase too late, obviously IBR rushed their news release to get out in front of this deal which they knew was coming. They were in conversation, albeit with pistols drawn at 10 paces. A few weeks back, IBR said they weren't going to news release till the end of May when they had both wells on 30+ day IPs, but lo and behold, out came last week's release with a 19-day IP on the second well.
Regards,
Naamkat