Quote from: TDoS on Jul 12, 2024, 07:58 AMThe international actors are completely different. Walk into the room with some energy minister or another and begin laying out costs, timing and particulars, and when you discuss the 15% iRR that can be achieved, you get told to go back to the drawing board and find 25-30% iRR projects to fund. Think of them as being loan sharks compared to how the domestic E&Ps do it.
The problem of course is that you project your IRR at what you THINK the oil will sell at when the well starts producing. If you say you think it will sell for $80 but when the well comes online it's at $60, your revenue is 25% less than projected. Obviously you have to convince the energy minister you are right and the IEA is wrong. This makes it a risky investment. The banks that ponied up money before the price dropped down to $30-50 between 2015-2021 took a serious bath since it had been selling at $90-100 in 2014.
So what price would you have penciled in right now (hypothetically) when you make your pitch to the Argentinians?
RE