(Disclosure: The following represents my opinions only. I am not receiving any compensation for writing this article, nor does Hydra Capital have any business relationship with companies mentioned in this post. I am long ATU.V)
Altura Energy (ATU.V, last at $0.155) reported its full-year 2019 results last night, showing net income of $2.2 million ($0.02/share) and cash flow from operations of $13 million ($0.13/share) on average annual production of 1,742 boe/day. That’s what Altura looks like in a “normal” world, but alas, nothing is normal about current times.
Altura provided an update on its waterflood pilot which showed that, at 200-metre interwell spacing (i.e., 8 wells per section), the injected water was showing up at the adjacent producing wells too soon (presumably by fracs that are overlapping between wells), which means that 200-metre spacing is too close. In addition to tinkering with the configuration of the injection well, I would think that Altura could take the equipment from the existing injection well and use it elsewhere in the field where they can test the waterflood response on 400-metre spacing (i.e., 4 wells per section). If I was building economic models at Altura right now, I might run three cases: 1) a 4-well per section plan with no waterflood, 2) a 4-well per section plan with waterflood (pilot project needed), or 3) an 8-well per section plan with no waterflood. Each plan would have its own recovery factor, but the only one that I currently consider is the 4-well per section plan with no waterflood (i.e., the current state of affairs), with is expected to yield a recovery factor of 8-10% on ATU’s lands (which are estimated to contain ~480 million barrel of original oil in place).