MCF
#Originally last July when the industry was dead, we were thinking these wells would be $8 million, $8.5 million to drill and complete and hook up.
So as time went by, and we started getting active and people became more active, so by the time December rolled around, that $8.5 million well slid to really like a $10.2 million, primarily driven by completion cost increase, not really as much as a rig or anything else.
And that's the number we're using in our budget, even though we've been ---+ we've seen additional cost creep, and we anticipate that to continue, if commodity prices stay in that $50 price range.
There's a lot of demand, and the way people are ---+ there's not that much supply when it comes to the frac crews.
So we anticipate there to be some additional cost creep, but we're keeping our flexibility in terms of how much we're committing to at any one time.
Relative to the first well, that was our first well.
We had some mechanical issues with the first well, so we came in above our cost.
But on the next two wells, we were basically at the AFE number that we put out.
So making progress.
The fourth well we're drilling a pilot hole.
We're going to do some additional testing and science on that, so that may end up costing a little bit more than our AFE.
But generally that's what we're seeing.
You hit the nail on the head.
We're trading at a pretty significant discount to our PV-10 value, especially if you look at the five year strip.
We're significantly discounted.
So we're getting in front of investors, and trying to talk to them to help them understand what we're doing, what the economics at the play are, what our value Company-wide looks like, cash flow from coming off our other assets, especially like the Gulf of Mexico, that's always a question as to, well, what's your strategy, what's your long-term strategy.
Well, our strategy is to make money first and foremost.
But in terms of how we get there, I think people would prefer for us to have a single basin focus but we've got great cash flow from the Gulf of Mexico, and we're going to continue to use that cash flow to develop our assets.
And right now, Southern Delaware is a premier asset, not only for us, but for most people that are active in West Texas.
That's our strategy, is just to get in front of more investors and tell them our story and really execute, show them our results.
So in terms of, <UNK>, are you asking how do we feel about that first well relative to our initial ---+
Well, I think it's really early in the process.
If anything, it's probably slightly below it, but we're not really sure about that, because it's just really early, and the way we flowed the well back, we had a controlled flowback.
Whereas a lot of our offset wells were pretty much open choke from the very beginning.
So we're monitoring that, and watching that pretty closely, obviously.
So I'd just say it's early.
That's all I would say to that right now.
Yes, yes.
Well, <UNK>, we originally had a pause in our budget.
But based off the results of the first well, and the fact that we think it's important to keep our service providers on our team, we decided that we'll keep moving forward, because we're excited about what lies ahead for us.
What will that mean to the budget for the whole year.
Obviously CapEx will be up versus what we originally forecasted, but so will everything else, hopefully.
But we ---+ like <UNK> said, we will continue to watch it all through the year, so to the extent that things ---+ the likelihood of a second rig is probably optimistic at this point, but you never know.
If results and/or prices are better than we expect, you might see one, but I think that would ---+ it would be optimistic to plug that into your model.
Probably nine.
No, nine in total for the year.
For calendar year.
So we'll total 11 or 12 by the end of the year.
That's always our strategy, but we do have, as we always say, we do have our ---+ or have said, we do have the capacity to go outside of that, if we think it's appropriate.
And if we keep this going, this rig going for the whole year, we probably outspend some, but not a meaningful amount relative to our liquidity.
We include some in our capital budget already.
We had about $10 million in our original capital budget for acreage acquisitions in 2017.
That's it.
Thanks so much for everyone's participation, and look forward to updating you soon.
