Greg from Canada

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    • Sat Jul 19th 11:51 AM
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      Historic Financial Collapse Underway?
      Inflation, I run an oil company and we are evil. It cost me $1 million cdn dollars to drill a 2000 meter well in December, $1.1 million cdn dolllars to drill the same well in Feb. and $1.2 million cdn dollars to drill in April and I just saw and AFE for the next well at $1.32 million dollars. If oil were to fall below $100/bbl I would stop drilling as it would be uneconomical. Here is how it works. $1.32 million to drill means $2.0 million to complete and put on line. $100 dollar oil equates to $65/bbl after governement taxes and royalities. $15/bbl to lift and process means $50/bbl left to pay capital. 1 in 4 wells are dry & G/A costs leave $40 for net return on capital. If the well is good at 100bbls/day then we get $4000/day net. Wells run on average 250 days a year due to weather breakdown etc. The decline rate on average is 15%. This is a two year payout of capital without decline, 2.3 years with decline. This is cut off for the investors, I would have a hard time convincing people to invest if payout on capital was over 2 years due to the extreme risk. I could have a blowout (cost in excess of 10 million), failure down hole (total loss + cost of cleanup and abandonment) or loss of life, the capital is risky so investors rightfully expect returns. But I am an evil capitalist, it has to make sense as I am also an investor and if we continue down this path I am sorry for my children and their children as they are going to come up in a prefoundly different world, I hope the unwinding works for the better.
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