I will have several posts over the next little while that analyze some of the numbers from Q2 2009. In this post I will look at the Costs that Juniors incur for producing natural gas. A little background, the costs that are listed here include Operating, Transportation, General & Administrative and DD&A (Depletion, depreciation and amortization). These costs do not include Royalty expenses. Operating and transportation costs are those that are associated with the direct day to day operations on the well. General and Administrative typically are those that are associated at the office level. DD&A costs are costs associated with acquiring reserves. Together these will give the approximate costs per BOED for oil and condensate or MCF for natural gas.
The average Junior profile is as follows:
Production: 2,632 BOED
Gas Weight: 69%
Gas BOED: 1,739 BOED
Oil BOED: 892 BOED
Operating and Transportation Costs per BOE: $12.80
General and Administration Costs per BOE: $5.57
DD&A Costs per BOE: $27.76
Total Costs (excluding Royalties) per BOE: $46.14
Total Costs (excluding Royalties) per MCF: $7.69
Here are the costs as they relate to the companies with production in the Western Basin:
| Company | Op Costs | G&A Costs | DD&A Costs | Total Costs Per BOE | Total Cost per MCF |
Fairwest | $15.55 | $2.62 | $88.45 | $106.62 | $17.77 |
| Action | $30.84 | $11.54 | $45.70 | $88.08 | $14.68 |
| Canadian Phoenix | $16.81 | $23.63 | $45.04 | $85.48 | $14.25 |
| Questerre | $12.18 | $17.83 | $53.65 | $83.66 | $13.94 |
| One | $24.69 | $10.76 | $32.71 | $68.16 | $11.36 |
| Dejour | $17.38 | $19.30 | $25.10 | $61.78 | $10.30 |
| Eagle Rock | $18.71 | $6.08 | $36.79 | $61.58 | $10.26 |
| Great Plains | $23.06 | $6.56 | $31.42 | $61.04 | $10.17 |
| BlackPearl | $13.94 | $4.58 | $41.72 | $60.24 | $10.04 |
| Second Wave | $27.42 | $6.15 | $25.86 | $59.43 | $9.91 |
| Fortress | $18.07 | $8.38 | $31.74 | $58.19 | $9.70 |
| Arsenal | $17.72 | $5.31 | $33.13 | $56.16 | $9.36 |
| Insignia | $15.44 | $8.97 | $31.73 | $56.14 | $9.36 |
| Cequence | $17.39 | $13.37 | $23.98 | $54.74 | $9.12 |
| West | $11.06 | $4.11 | $38.95 | $54.12 | $9.02 |
| Crocotta | $13.41 | $5.98 | $32.10 | $51.49 | $8.58 |
| Culane | $12.48 | $4.31 | $33.56 | $50.35 | $8.39 |
| Painted Pony | $16.89 | $4.61 | $28.07 | $49.57 | $8.26 |
| Redcliffe | $17.63 | $6.79 | $24.71 | $49.13 | $8.19 |
| Twin Butte | $16.03 | $5.15 | $27.90 | $49.08 | $8.18 |
| True | $14.83 | $2.90 | $30.80 | $48.53 | $8.09 |
| Midnight | $9.16 | $5.35 | $33.82 | $48.33 | $8.06 |
| Bellamont | $13.31 | $4.04 | $30.63 | $47.98 | $8.00 |
| Result | $9.74 | $7.34 | $30.34 | $47.42 | $7.90 |
| Monterey | $13.43 | $3.46 | $29.48 | $46.37 | $7.73 |
| Nuloch | $11.36 | $6.79 | $26.87 | $45.02 | $7.50 |
| Diaz | $15.23 | $(0.90) | $30.17 | $44.50 | $7.42 |
| Seaview | $14.35 | $3.04 | $26.79 | $44.18 | $7.36 |
| Petro-Reef | $12.32 | $3.57 | $27.07 | $42.96 | $7.16 |
| Prospex | $10.23 | $3.03 | $29.34 | $42.60 | $7.10 |
| Argosy | $6.90 | $12.89 | $22.73 | $42.52 | $7.09 |
| Orleans | $12.39 | $3.32 | $26.29 | $42.00 | $7.00 |
| Anderson | $9.58 | $2.34 | $29.65 | $41.57 | $6.93 |
| Arcan | $11.50 | $6.92 | $23.11 | $41.53 | $6.92 |
| Canext | $11.80 | $5.53 | $23.98 | $41.31 | $6.89 |
| Wrangler West | $15.67 | $2.72 | $22.05 | $40.44 | $6.74 |
| Delphi | $13.39 | $1.97 | $24.68 | $40.04 | $6.67 |
| Sure | $10.41 | $4.82 | $23.83 | $39.06 | $6.51 |
| Midway | $9.33 | $5.55 | $23.07 | $37.95 | $6.33 |
| Triton | $9.94 | $4.76 | $22.75 | $37.45 | $6.24 |
| Dee Three | $9.45 | $5.10 | $22.73 | $37.28 | $6.21 |
| Zapata | $12.70 | $4.21 | $20.20 | $37.11 | $6.19 |
| Rock | $12.40 | $2.58 | $22.10 | $37.08 | $6.18 |
| Twoco | $7.32 | $3.25 | $25.07 | $35.64 | $5.94 |
| International Sov | $8.50 | $4.14 | $22.91 | $35.55 | $5.93 |
| Zargon | $13.08 | $4.29 | $18.09 | $35.46 | $5.91 |
| Open Range | $5.97 | $4.22 | $25.18 | $35.37 | $5.90 |
| Berens | $8.52 | $3.55 | $23.22 | $35.29 | $5.88 |
| Buffalo | $14.64 | $4.81 | $14.89 | $34.34 | $5.72 |
| Vero | $9.99 | $2.73 | $19.50 | $32.22 | $5.37 |
| Cinch | $3.23 | $3.74 | $25.19 | $32.16 | $5.36 |
| Freehold | $5.39 | $2.86 | $23.87 | $32.12 | $5.35 |
| Yoho | $8.55 | $1.70 | $19.69 | $29.94 | $4.99 |
| Bonterra | $16.12 | $2.43 | $10.76 | $29.31 | $4.89 |
| Stonefire | $5.86 | $1.96 | $17.26 | $25.08 | $4.18 |
| Angle | $4.56 | $3.15 | $15.57 | $23.28 | $3.88 |
| Terra | $7.42 | $3.13 | $12.72 | $23.27 | $3.88 |
| Storm | $7.12 | $1.71 | $14.43 | $23.26 | $3.88 |
| Ironhorse | $2.98 | $3.81 | $14.85 | $21.64 | $3.61 |
| Average: | $12.80 | $5.57 | $27.76 | $46.14 | $7.69 |
If you focus on natural gas, there is an interesting picture. The current 2010 AECO strip is $5.93 per MCF for revenue. Of the 59 companies listed, only 15 companies will turn a profit on natural gas based on their costs and the AECO projections of $5.93/MCF in revenue.
If you were to add royalties to the expenses at 20% of the revenue (a swag on my part), then only 6 of the companies would be able to turn a profit. These companies are; Bonterra, Stonefire, Angle, Terra, Storm and Ironhorse.
Interesting how only approximately 10% of the publicly listed companies on the TSX can make money on natural gas. Also consider that the 59 companies listed are 69% gas weighted, which is a scary picture.
I have an Excel Spread Sheet version of the information contained in the Iradesso report that you can use for analysis. All you have to do is email me and ask for it. It's a great spread sheet for determining where certain companies line up compared to others and compared to the averages.
I will have more analysis in the near future on Q2 results, such as daily profit or loss per company, reserves replacement costs based on year end reserves numbers and Q2 DD&A numbers, among others.
These opinions are mine and may not reflect your view. If you would like to contact me, then please feel free to do so at info@argentis-group.com.
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