I've listened to the Penn West investor day presentation a couple of times now. Both because I own Penn West (fingers crossed for a sell-off so I can buy more) and because they are starting to release details on what horizontal drilling is doing to the Cardium play of which Petrobakken is a major players.
http://www.pennwest.com/investors/documents/102010_InvestorDay_Calgary_FINAL4.pdf
Slide 31 in the link above shows the economics of a Cardium well according to Penn West.
While Slide 22 below shows the economics of a Cardium well according to Petrobakken.
http://www.petrobakken.com/wp-content/uploads/2009/06/PBN-2010-09-27-Corporate-Update-VIEW.pdf
So Penn West believe that each Cardium well is going to have an NPV of about $2.5mil. For Petrobakken (who cracked the drilling code in the Bakken) and use longer laterals the estimate is $4.0mil.
Petrobakken has over 500 net locations in the Cardium. At $2.5mil to $4.0mil per location there is some value in that land. I don't expect to be rewarded for it as a shareholder until the drilling results come in, but make no mistake Petrobakken is a growth company as is Petrobank.
With the ramp up in drilling in Q4 now both here and in the Bakken we should get some good information fairly soon. As has been the case for the past 4 years reserves, production and cash flow will continue growing rapidly.
