BP To Drill 10 Appraisal Wells in Trumbull in 2013

BP announced 12/17 that beginning in April 2013, they will drill the first of 10 "appraisal" wells in Trumbull County. They say if the results are positive, more will be drilled ASAP to get as much of their leased acreage HBP as possible. 10 wells in one year is a LOT of activity! They talked about pipeline infrastructure, midstream processing capability being built, the whole shebang. So from a landowners perspective, what does this mean? The appraisal wells will probably not produce much if anything. Can they be enlarged to producing wells? If you get unitized for a appraisal well, are you shut out of royalties because your well isn't a producer? This thing has all the makings of a big roll of the dice, largely a matter of luck. Doesn't look like many will see their signing bonus a second time at the end of the primary term. You will either be HBP by then, or your land found to be unproductive and the lease allowed to run out.

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Permalink Reply by farmgas on December 23, 2012 at 6:31am

Thanks Brian,  your experience & knowledge & insights are very much appreciated.  I suspect what you say would hold true for the well services companies that do the fracking, too.  I see where the same well services company does most of the fracking for a given O&G company.  

Merry Christmas!

Permalink Reply by Brian Powers on December 23, 2012 at 8:10am

farmgas -

your assumption is correct - no secrets among any of the providers, be it wireline or other measurements, the bit suppliers, suppliers of diectional drilling, fishing services, the  drilling fluids, the casing/ tubing handlers fracing or other stimulation services, etc. Most of these folks have become acuainted or friends through many years of working collectively to achieve goals. People observe, people hear, people talk - not always in a bad way, either; I've picked up an awful lot of good ideas simply by listening...

Happy Holidays to you and yours and to all the members of this fine forum

 

Brian

Permalink Reply by farmgas on December 23, 2012 at 8:35am

Brian--this discussion has really been interesting to learn about the interaction between all participants of this industry.  It has been frustrating to me, and I suppose to many others, too, how secretive members of the O&G companies are that we have to deal with in our own personal situations.  It has always been my viewpoint that the need for secretcy by the O&G representatives isn`t necessary because of this interaction amonst themselves.  Just my opinion...  Thank you for your insightful comments.

Permalink Reply by MJ on December 23, 2012 at 4:19pm

Thank you Brian and Farmgas,

I have learned much this day - and wish to extend a merry christmas and happy new year to all!

Permalink Reply by Jim P on December 25, 2012 at 3:34am

A family member received his BP bonus West of Mesopotamia on the Trumbull /Geauga county line!  ALL of NE Ohio is in play! Now hear of Lease agents in Geauga County offering 5-6K per acre "on the spot" !

Permalink Reply by bo boboski on December 25, 2012 at 4:29am

"On the Spot" That's what I want to hear!. Let them go to the recorders office 1st ,if they really need your mineral rights, they can pay,"on the spot".

Permalink Reply by Jon Popio on December 27, 2012 at 7:16am

So back to my original question..is an appraisal well that yields promising results likely to be enlarged to a production well or would they tend to start fresh nearby? Would you be screwed to be unitized in an appraisal well unit?

Permalink Reply by Brian Powers on December 28, 2012 at 4:43am

Utica -

Of course if an operator gets a huge upside surprise with the appraisal well and has infrastructure in place, they may chose to complete, clean up and produce to sales to help monetize the investment while evaluating the other appraisal well data.

 

Brian    

Permalink Reply by sldouglass on December 28, 2012 at 5:12am

I do not think there is likely to be a "huge" upside or downside surprise from what the producer already knows from seismic work.

I suspect investigative wells are likely to be fully or partially shut in until real production begins - if there is no way to dispose of the product in the immediate vicinity.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on December 28, 2012 at 5:17am

You're putting far too much faith into seismic data.  That's like diagnosing breast cancer with an x-ray.  Sure, you'll see something on there that gives you a vague idea but it is hardly conclusive.

Permalink Reply by sldouglass on December 28, 2012 at 5:25am

This ain't wildcat drilling in these shales.  It is pretty hard to find a well that has not produced, a dry hole.  I have not heard of one yet but there may be one out there somewhere.  Some wells are better than others.

In conventional drilling there was [and is] wildcatting and dry holes.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on December 28, 2012 at 8:27am

CHK's first well in Mahoning produced nothing of note.  DVN's wells in Ashland and Medina were both dry.  HG Energy had two dry ones in Monroe.  CHK plugged one in Portage and one in Stark.  There's no guarantee with these things.

The other issue is the one that only time will sort out: how much will these wells outside of the sweet spots actually produce relative to their cost?

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