This is break even, which is not the same as extraction costs, capex costs etc, as this includes taxes, interest etc.
These break even costs are for the whole mancos region with none conventional wells with laterals. Its quite possible that Rose will come in cheaper, but quite simply we don't know and nobody does until we have at least drilled a couple of holes and got some good figures.
This is where we get the differences. I know that in a previous blog i mentioned that Rose BOD had mentioned a cost of $18-20. Personally i think this was likely to be a pure extraction cost and it could be a mis-quote or the BOD just not clarifying exactly.
Regardless of this we are left with uncertainty and this is what the market doesn't like, it will prescribe the worst case which is the area average of $50-55.
This is why the price of oil currently at $77 is important, but isn't as important as the direction of the price of oil.
When i made the comments yesterday its important to note that i only gave a price that I would have to be silly not to buy at.
This wasnt a prediction, just a wish.
Rose still has an amazing business model, its copying multi billion companies, with good acreage, excellent personal, tight strategy, good revenue raising. All at an early stage. Lots of good news to come, Spuding of Mancos etc.
However we need the pressure value of falling oil prices to release the SP. It will happen, but we will also have a lag between it happening and the SP responding.
Thanks Iceberg for the response - the $10-$20 per barrel costs were finding & development cost - it didnt include the extractions costs.
ReplyDeleteMy other point was that they have added a whole load more accretive value in the time since the summer.