Goodrich going ALL IN in the TMS. Math equates to just under $150/acre.

Goodrich Petroleum Corporation Announces Agreement To Purchase Producing Properties And Approximately 185,000 Net Acres In The Tuscaloosa Marine Shale Trend For $26.7 Million; Company Also Announces Initial Completion Result Of Its Smith 5-29H No. 1 Well At 1,045 Barrels Of Oil Equivalent Per Day (96% Oil)

Jay

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Thanks for pointing out the per acre price.  The transaction gives GDP the option to keep a small fraction of the 185,000 acres at a bargain acquisition cost per acre.

Would the transaction happen to include Indigo?

I think you have it figured out exactly right, Jay.   I agree that Sinopec is Goodrich's new deep pockets partner which could easily lead to a future joint venture on Goodrich's acreage.

As I pointed out in another tread.  Here is a little rough math, 750/bbl/day*80%NRI*66.7%WI*$100/bbl =$40,000/day in revenue or in 66 days the revenue could pay for the transaction, with decline curve it could be 100 days, but still a great deal.  You almost could say the acreage was thrown in for free.

Good way to look at it, tc.

I like looking at this way too, but my math came out with a much longer time for return on investment.  Also, I assume we need to factor in their WI portion of the production costs, etc...  Still may be a good deal and I'm hopeful for them.

66 x $40,000 = $2,640,000. With decline, I would guess you are looking at several years to realize a full return on the $26,700,000 transaction cost.

Math skills, eye sight (damn bifocals) all go down hill after 50.  Time to get out the gigantic calculator.  That's for catching my big error. 

Okay, tc.  That's not a good way to look at it.  LOL!  Guess we share the same math skills.  Thankfully I'm not quite at the bifocal point yet.

Is there anything in particular that suggests they may not decide to keep all or almost all the acreage?

Time and capital.  At closing GDP will have 320,000 net acres and I would assume it would take a large number of rigs to HBP all that acreage before lease expiration, most of this acreage has already been leased for 2 years or more, even including extension payments.  Here is another try at math:)  320,000 net acres divided by 1,000 acre units equal 320 net wells have to be drilled in the next few years to HBP all that acreage.  I think the most net Hz wells that GDP has drilled in a year is 40.  The big wild card is a JV partner with capital to fund GDP's portion of early drilling.  Even then I am not sure if GDP has enough internal human capital to manage a large drilling program.  I wonder if there are more pieces to this story that have not been announced.

If they can complete enough successful wells in the next 2-3 years they will generate substantial cash flow , plus large reserves that would enable them to secure loans or other investment capital to keep a lot of that acreage leased at least until they can drill and hold it by production. They could also sell some leases to other operators like Devon did. Then again maybe Sinopec has all the money they will need. A number of things could happen. We will have to just wait and see. The value of their leasehold could increase substantially if the TMS continues to prove it is economic.

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