VLE: Successful 3rd flow test

So far VLE had been 2 for 2 on their first test deep well. The company recently announced that their 3rd flow test has been a success. The results are similar to what the first and second (2nd test results were hurt by a mechanical issue) test.

Over the final 24 hours of stable flow, the well was produced at an average restricted rate of approximately 0.9 million cubic feet per day (“MMcf/d“) of natural gas. This rate compares to the final 24-hour rate of 0.8 MMcf/d in both Test #1 and Test #2.

Condensate production in the range of 20 to 30 barrels per MMcf was observed in Test #3. The condensate measurement is subject to considerable uncertainty given the nature of the testing protocol and the short duration of the testing.

So far VLE has shown production of 2.5 MMcf/d of natural gas at the restricted rate. Cormark recently made a comment that on a production well the company could easily show 10-30 MMcf/d. Now these are absurd numbers and the valuation for VLE just looks stupid cheap (even after a recent 5x+ in a month).

At production of 10 MMcf/d and gas prices at $7 mcf in Turkey, the annual revenue from one well could $25M+. And the cost per well should be around $6-8M. Clearly the ROI on this asset is superb for anyone to deal with the low country risk.



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