You don't need to analyze a publicly traded O&G operator. There are loads of independents that do the exact same thing, including fracing, that the big boys do. It ain't rocket science anymore. Thanks to modern tracing techniques, directional drilling, $80+/bbl oil, dry holes are rare here in the Basin.
Use this as a ballpark, but it won't be far off:
$6M cash outlay "to the tanks"
100bbls oil daily
75bbls net to operator/producer
$7500 per day income, not including nat gas, so ballpark it at $8000 per day income
= $2,920,000 annually
2 year payout
There are just as many, and likely many more new wells making 300-2000 bbls/day than 100 bbls/day, but you guys do the math.
563 drilling rigs currently running here in the Permian.
They aren't stupid.
