Now an Engineer would have to be as dumb as a bag of hammers to build a first stage production base camp for production operations and not buy the drill pipe, casing and high pressure well heads for the first 2 wells that are a contractual obligation and are long lead items.
I would suggest that LFD has purchased all the drill pipe, casing and well heads for two wells.
LFD may have purchased a small test separator similar to what I identified in my earlier posts on WZR; do you remember those photos I suggested all LFD shareholders look at. (Now you know why)
Note. You buy a small test separator today, use it as a first stage separator for a couple of wells to get cash flow; then later as you build the main big plant, you use this small separator as a test separator on the front of the plant or as a gathering separator for some satellite wells. What ever works in plant design. But a good engineer would buy it now and get LFD cash flowing as soon as that first well is drilled to get some of that invested capital back to pay for the second well.
The cost of that camp is far greater then the cost of a small test separator to get into production.
If LFD has all the drilling material that are normally supplied by the operating company, then LFD needs very little money to drill these 2 wells.
When an engineer issues a drilling budget, it could mean anything. He could have included the above camp and all the drill pipe into the budget etc.
Or you could say that the drill budget is for the rig only.
So when LFD has stated drilling budgets in past MDAs; many of the parts may have been bought.
I have identified drill rig costs, drilling time and the fact that LFD should have no seriouse drilling problems.
If LFD has all the drilling and well materials paid for; then future drilling costs are probably far smaller then most people realize.
I doubt LFD will sell to GENEL for U$70 mil; when that is what LFD has injected into CHAI.
Why would LFD sell when they can easily get into production ????