@Bird4um @YUMU @Cryptical Envelopment
High Pressure hole with 14 pay zones, 1.1% Recovery 1.9 BFC. There's a lot of technical jargon i need to parse through when i get home from work but quick math says this is a 1 billion dollar + hole. No mention of HE3, there was mention of creating a simplified processing plant for this well and the few they'll drill around it since the majority is comprised of 94% nitrogen (easiest possible byproduct to process/bleed out).
The results on well 4 didn't quite equate to some of the hype, the overly technical news release definitely didn't help. Market sold off on reopen, I would be buying here if I had cash. They are still 4/4 on wildcat drills with next 10-15 holes all being branched off of these locations with high probability of success. A well with 1.1% recovery anywhere else in North America would be considered a massive success. I expect the price to rebound when they're able to explain their results in laymans terms. A lot of short term risk was removed from the table today.
/CNW/ - DESERT MOUNTAIN ENERGY CORP. (the "Company") (TSX.V: DME) (U.S. OTC: DMEHF) (Frankfurt: QM01) From the President of the Company. Desert Mountain Energy...
www.newswire.ca
Here's the math on well 4.
1.9 BFC for 2/14 zones = 1,900,000 MCF
1,900,000 MCF x 1.1% = 20,900 MCF
20,900 MCF x 269$ per MCF @ crude price = $5,622,000
$5,622,000 for 2 zones @ crude price $269 per MCF
$20,900,000 for 2 zones @ a refined MCF price of $1000 per mcf (this is middle to low end assumed value for refined)
Extrapolated for 14 zones (pure assumption the other zones produce similar results)
$39,354,000 for 14 zones @ crude price $269 per MCF
$146,300,00 for 14 zones @ a refined MCF price of $1000 per mcf (this is middle to low end assumed value for refined)
Cost
* A normal well averages 500k cost. This was a deeper well and encountered many delays , let's assume triple the cost @ 1.5M.
* Processing cost they've stated before will be paid entirely by selling other present rare earth gasses like argon. It's not large amounts but enough to pay daily cost. The cost of the production facilities are spread out over all the wells from now an till the end so hard for me to cost per well value here. Their budgeted plan for processing facility was 24m which included enough solar power to run the facility and limit ASIC.
Well 4 certainly wasn't a homerun as far as recovery % , if this had been 4-7% as many expected we'd be seeing better price action. The sell off today was disappointing but my conviction remains strong. DME continues to find helium at a higher recovery % and higher rate then any of their peers and they have a massive geographical advantage for transport/end consumers.
Tomorrow the CEO is doing two interviews so hopefully we'll get some additional insight into production plans.
(I did not sell a single share and i would be adding today if i had cash in that account. TD Ameritrade doesn't clear deposits for OTC purchases for like 3-5 days. F' them)
