>The only problem for FO is that it will need to eventually finance its percentage of expenditures, and initial cash flow will not be enough to cover those expenses.

This issue has been brought up on several occasions, but I don't think anyone has actually come up with a ballpark figure on how much money Falcon will require if the project proceeds to the development phase. So this is what I come up with.

50 wells per year @ $12mm = $600mm

From MOL: "On top of it, 50 unconventional wells will require some new surface facilities costing approx. $30–40 million."

So we're talking about $640 million in the first year, using these numbers. If Falcon has to pay 1/3, that's $213 million.

Also from MOL:

"Discounted payback period of a well is 2-3 year"

So roughly that's $4mm in revenue per well, so Falcon gets $1.3 mm.

At 50 wells, thats $65 million, so in the second year they need $213mm - $65mm, which is $148mm.

In the third year, they now have 100 wells, giving them an income of $130mm, so by the third year they need an additional $83mm.

In the fourth year, they now have 150 wells, giving them an income of $195mm, so now they need $18 million.

By the fifth year, the project will be paying for itself. In order to get to that point, they need roughly $462mm.

So overall, the amount of money that they will need seems enormous, but not outrageous. Hopefully by the time comes, credit will be more readily available. We already know that Maquarie was quite willing to lend them $250mm back in 2006, before they had even proved existance of the BCGA, so personally, I don't think money will be that big of an issue if Exxon decides to go ahead. Unless of course, they spend all their income elsewhere.