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Cash Margin & Oil Price Rise

  1. cmonaussie

    5,793 Posts.
    The stellar rise in oil price has given me renewed bullishness. As I was doing some analysis I thought I'd run SSN's Cash Margin numbers based on the Qtrly info into the rising estimates for production and oil price.

    Looks like the worst is behind SSN - if Production rises as indicated and oil price does not resume its slide. Not a negative word said. Below are the raw numbers. Methodology roughly as follows:

    a. G&A expense is latest Q4 ($1,280,000) as a mthly number going forward

    b. Interest Expense is calculate in the $17.5M drawn @3.48%

    c. LOE is difficult to estimate so gave it roughly the same in Jan as Q3/Boe and then reduced for increased production. Could well be overstated

    d. Production: Jan slight increase over Dec and then increase by 40% (reflecting the 13 wells coming online) and then by 20% . BTW that puts the Qtr at about 1,121 Boepd - if that's to high say so!!

    e. Avg Sales Price (ASP) is based off of Q4 and is the ratio Q4 ASP to PAALP WBS avg into Jan/Feb/Mar. Jan PAALP WBS avg was $31.65. Going forward used estimate of WTI and subtracted the differential (kept constant from Jan) and prorated.

    f. Hedging gains are taken from Qtrly and interpreted as annual hedges distributed equally across 12 months (so 4,838 BBls mth at avg $90.11)

    I think that this shows the challenges that SSN faces and how operationally it is being addressed. As always, the numbers are my best estimates IN GOOD FAITH AND RESEARCHED AS BEST AS CAN BE.



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