VIRGINIA HILLS OIL CORP VFGGF

juniors and shale oil

[billyjoebob]

I've heard both Eric Nuttall and Keith Schaefer say that drilling for shale oil in juniors is not ideal, e juniors just don't have the cash. The payback takes too long (2 years), which makes recycling difficult. I don't understand how that is, I though the shale had higher IP and then fast decline, so I would think it's the other way.

And Edmonton oil is now at $106, higher than WTI. That has to change the economics of these wells.

[billyjoebob]

interesting review of shale plays. argument is that market is overvaluing large pure play shale production, undervaluing juniors. https://sumzero.com/sp/shaleassets

[terroir]

The economic problem for these wells is that despite the relatively high IP rates, the decline is so steep as to drag out the return on capital to two years or considerably more. Many juniors, faced with dragged out cash flow, and the need to build infrastructure, took on high debt to cash flow loads...sometimes too high...resulting in banker issues and consequent restrained capex. Without the

[spastic121]

Exellant post Terroir!!! Q2 will show marked decline in production coupled with no new wells coming on. The only saving grace may be the results of the waterfloods although I am stilll concerned with the staement on the last MD&A about trucking in water as road banes may affect this. Q3 and more likely Q4 will tell the tale when they can get back to drilling and be that much further into

[bankerboy28]

I would have to agree that Q2 results day will knock the share price down...then Q3 and Q4 would hopefully be a building point....another problem is that energy small caps especially are still out of favor even with oil and gas at reasonalbly high levels....look at a fund company like Sprott...you live and die by the sectors you choose and when you choose them and right now they are being