NEW YORK, Oct. 14, 2005 (PRIMEZONE) -- Biogenerics Limited (Pink Sheets:BIGN), with its joint venture partner Hydroslotter Corporation, are forecasting a minimum 120 wells to be slotted in 2006.
The cost of slotting these projected wells weighs in at approximately US$200,000 per well. With economies of scale, we can reduce those costs. Given that the estimated slotting cost is returned in 30 days, the cash flow outlay to grow is minimal.
For example: The current Grimes, Calif. well, now in production, is forecasted to have a life of 5-10 years. Four additional wells are being slotted in conjunction with the Grimes, each at 5-10 years. The costs and time to slot four wells is 10 to 14 days and will have a 25% reduction in outsourced service charges.
We expect each of our five wells to be tied into the same meter site and expect combined flow at 2,500,000 MCF.
The projected cash flow will cover expenses in 30 days. We then receive net 40% of the flow after costs are repaid. That would register at US$10,000 per day.
Upon each of the forecasted 120 wells in full production, in conjunction with alternate wells coming on stream in 2005, we will have a daily cash flow of US$240,000. Ultimately, these wells will produce US$87,600,000 annually.
For the reason that we are not slotting all available wells, in week one after costs, we expect US$43,200,000.00 in profits for 2006 from the Hydroslotted wells.
Our strategy suggests 10 new wells per month in 2006. In 2007 we expect to double that to 20 wells per month.
Bearing in mind that when dealing with the oil and gas sector, delays may occur, prices may fluctuate, and thereby management accounted for the risk factor discounting the guidance by a factor of 35%.
Biogenerics does not forecast earnings from the New Mexico joint venture in this forecast because it is currently unquantifiable.