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Argentis Group Provides Service To Reduce Capital Spend Up To 60% & Greater For Oil And Gas Compani
A new way to identify capital savings in an oil and gas company that may be the difference between survival and death.
By: Argentis Group Inc.
An example of why capital is extremely tough for oil and gas companies to access is as follows: The average well in 2007 in the Western Canadian basin costs $2.4M to drill according to the National Energy Board of Canada. The average well, according the Canadian Association of Petroleum Producers, produces 30 barrels of oil equivalent a day and has a reserve life index of approximately 8 years. Given current ratios of oil and gas and future predicted prices, the average well will only generate $2.6M in revenue over an eight-year period. This does not take into effect any operating expenses. Even if you didn’t have any expense to pay, the well would only make $200,000 over an 8-year period, which makes it extremely tough to attract capital for an investment. In fact, once expenses are factored in, the average well currently being drilled in Western Canada will more than likely not achieve profitability.
Argentis Group has a patent pending process that will help identify missed production, missed reserves, missed revenue from gross overriding royalties, working interest differences and trespass wells.
This biggest impact that Argentis Group has on a companies financial strength is identifying missed reserves. For every barrel of oil equivalent that is found for a company, it adds enterprise value and can reduce capital expenditures. Typically companies will deploy a certain amount of capital to replace depleted reserves. This figure can vary, but the reserves replacement cost is approximately $35K to $60K per barrel of oil equivalent, depending on the scope of the drilling project. If Argentis Group identifies enough reserves to replace 100 BOED’s, then this company can potentially reduce their capital spend on reserves replacement by up to $6M ($60K/boed X 100 boed). In addition to this, it improves the overall financial condition of the company and if they can access capital, they can typically borrow up to half of the newfound reserves values. This service can mean the difference between dying and staying alive.
Argentis Group Inc, http://www.argentis-
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Argentis Group Inc is a consultancy firm based in Calgary specializing in obtaining capital cost reductions, revenue enhancements and operating expense reductions for oil and gas companies that have production in the western Canadian basin.