Production & Reserves
As I mentioned before, E&P companies have a depleting asset base that must be continually replaced through drilling or acquisition. So the first thing we need to do is evaluate the company's current production and its reserves.
All of Synergy Resources production (current wells) is located within the Denver-Julesburg Basin (Colorado) as well as its undeveloped acreage.
The number of wells operated by SYRG is growing very fast as well as the number in which the company has participation interests. the difference between gross and net is that a gross well is a well in which a working interest is owned. The number of net wells represents the sum of fractions of working interests owned in gross wells.
In terms of production, we can see the company is recording extremely high growth. “Bbl” means a barrel of 42 U.S. gallons of oil and Mcf” means thousand cubic feet of natural gas. Of course this all adds up to oil and natural gas prices. As Natural gas prices have been decreasing for so long, the focus is mainly on oil production.
Regarding proved reserves, SYRG is clearly growing fast. The company is achieving this both by acquiring interests from others and by drilling activities.
This means that in operational terms, SYRG is performing very well as it is replacing its assets at a higher rate than it depletes them, it is producing more and it seems to have a a good pipeline of projects (acquiring interests and drilling activities) underway.
Just to understand a bit more about this operational area I'll explain some terminology about the drilling activities:
- Dry Hole: A well that fails to discover oil or gas in paying quantities.
- Exploratory Well: A well drilled for the purpose of securing geological or geophysical information to be used in the exploration or development of oil, gas, geothermal, or other mineral resources.
- Development Well: A well drilled to a known producing formation in an existing oil field.
During the last three fiscal years the company says to have not drilled any exploratory wells nor drilled any dry holes.
Tópico: Production & Reserves
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