...to be increased. This E&P operates in the NW shelf, San Andres formation, which is actually considered a conventional reservoir. It is shallow (4,600') and typically requires only a modest frac, so the cost to drill and complete a well there is about half of the cost of typical Permian well. Yet over the first 30 months these San Andres wells typically produce about 3/4ths of what a typical Permian well produces and, due to a more modest decline rate, at month 30 they typically are producing at a rate that is about triple what a typical Permian well is producing at.
They also have a great EOR project going which is planning to start injecting water in about 5 months and then, once the reservoir gets properly pressurized (which they think will happen after about 5 months of injecting water), also injecting CO2.
As a result of the tremendous economics of their play, they can comfortably pay a dividend which is currently resulting in a yield of just under 5% while still growing production at a rate of about 35% per year. Their debt is minimal, 0.8X trailing 12 month's EBITDA after taking into account a big paydown that they did 3 months ago when they did an equity raise.
They should be announcing the next quarter's dividend any day now, which I'm expecting to be significantly increased. The stock has lagged the recent moves in the larger E&P companies, probably due to the fact that there is so little float out there, but I believe the stock price will catch up somewhat once they announce the new increased dividend.
Dan, this stock would be a good fit for either your Small Cap or your High Yield portfolio, if you are at the point of looking for a new name to add.