Depletion "Type Curves" from company websites show a dramatic drop in production after one year

The "Type Curves" from many of the company presentations seem to indicate that the gas/NGL output from horozontal wells will fall by ~75% within one year, and oil by ~50%.   Page 36 from the Antero presentation is one example.  Am I intrepeting this accurately?  Any comments will be appreciated.

 

http://www.anteroresources.com/wp-content/uploads/Company%20Website...

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Permalink Reply by LERRET on February 26, 2013 at 6:24am

Again, the performance of a single well is not indicitive of the performance of all the wells. That is going to be lower probably.  If one graphed all the wells IPs or EURs then you would get a sense of the total likely production.

 

If 20% perform like the Stuzman and 80% do a third that????

A plot of IP v. EUR is more meaningful the more wells you can get and that would be a far better metric to apply imho

Permalink Reply by Bluflame on February 26, 2013 at 7:44am

Hello LERRET,

  I'm attaching a modified version of a spreadsheet I prepared for another purpose. This spreadsheet shows IP for all GPOR Utica wells produced to date. It shows total Boe/d and daily production of NG, NGL's and Oil. This data was compiled from GPOR press releases over the past several months. I hope this helps!

  They will release 2012 financials tomorrow and will likely also release their Feb2013 operations report. We may get additional well results.

BluFlame

  

Attachments:
Permalink Reply by Bluflame on February 26, 2013 at 7:48am

BTW. I've not seen any EUR data for these wells. Most are plugged awaiting midstream infrastructure, which should come on line any time.

BluFlame

Permalink Reply by Mark Thevenot on February 26, 2013 at 6:02am

I believe shale oil well depletion rates will average closer to 75%-80% in most fields - IMO. But, the decline may flatten at 20-25%(varies by field) of initial IP30 and could continue at that rate with artificial lift for several years. The poor economics resulting from the swift decline rate in shale oil, ngl's and dry gas is offset somewhat by the ability to continue to drill additional wells on tight acreage spacing - 90 acres and possibly less per well in the Eagleford shale for example. Eventually however, the fast decline rate will kill the entire field once all the wells have been drilled and produced. Shale gas and oil is very dependent on drilling new wells and that,someday, will result in the end of our oil resources in the U.S. We should all hope that takes a long long time. The boom is now, but don't expect it to last forever - shale wells do not produce a lot of oil and gas for long periods of time. Hopefully technology will prolong their life, but that too is limited by Mother Nature. Coal still has a future and the world may be back after it eventually. Solar and Wind and Geothermal etc. are probably not ever going to replace fossil fuels in our lifetime, if ever, so give that dream up and accept reality. We have no choice at this point but to "drill baby drill" and "frack baby frack" and  continue to mine coal unless we want everyone to be to walking around looking for food 100 years from now. IMO

Permalink Reply by Bluflame on February 26, 2013 at 2:19pm

  I've recently seen an account asserting that re-fracking Barnett wells after year two or three resulted in production exceeding IP. No account of decline thereafter. The guess of the writer as to cause was fracture path impairment. Apparently the second frac job opens new fissures where others failed.

  Unfortunately I cannot account for the validity of the assertion. Dr. Vikram Rao commented about this re-fracking success on Page 66 of his interesting book, "Shale Gas, the Promise and the Peril". Obviously, assuming this is factual, the cost is much lower than drilling an entirely new well.

BluFlame

  

Permalink Reply by Bluflame on February 27, 2013 at 1:28am

Dennis,

  Considering Schlumberger's success with this process, you'd think it would become a no-brainer standard practice! There must be "more to the story".

BluFlame

Permalink Reply by Joseph-Ohio on February 26, 2013 at 3:58pm

Looking alot to me like varying geography / varying geology means varying depletion rates.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on February 26, 2013 at 4:34pm

The Barnett has very, very few wells that were truly dynamite.  The vast majority of the original field is totally uneconomical.  Ditto the Haynesville and Fayetteville.  The problem then becomes the companies and their constant need to replace production at higher and higher rates.  The Driller's Treadmill.

Permalink Reply by The Hiker on February 27, 2013 at 12:43pm

During the Gulfport 2012 year end/investor phone call this afternoon, 90% of the questions were on the Utica, and many of the analyst's questions were on depletion rates.  Mostly, Gulfport punted; not enough data, but it's clear that the investment community is very aware of the situation, and mighty curious about the Utica.  Regardless, GPOR closed up 3 points in response to the rosy outlook for 2013.   The essence of the call was "we're going to revisit existing pads with pipeline access, and put in more wells where they can connect to sales sooner."  Also, a very interesting description of the "Darla" well they have planned to look at optimum lateral spacing.    

Permalink Reply by Bluflame on February 27, 2013 at 4:37pm

Hiker,

 I also listened to the phone call. I liked Jim Palm's (Gulfport's CEO) enthusiasm. I thought he was a straight shooter. When he didn't have the answer, he admitted it. But, he was forthcoming with lots of revealing comments and pertinent statistics. He was obviously fired up about the Utica shale.

  For anyone involved with the Utica Shale, especially in the southern sector, it should be mandatory listening. The taped transcript is still on GPOR's website. Highly recommend it to all. Liked his comments about "pad drilling". Skip the drone-like prepared pitch and go directly to the Q&A segment 

Sincerely,

BluFlame

Permalink Reply by The Hiker on February 28, 2013 at 4:40am

Bluflame:  Agree that this is mandatory listening for those interested in the Utica.   Yep, skip the prepared intro and go directly to the questions.  Even the analysts were fired up over the Utica.

I discovered a good site today:  www.rbnenergy.com.  Lots of good summaries and analysis, especially on NGL's.  Maybe you've seen it already. 

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on February 28, 2013 at 5:25am

Analysts are fired up because GPOR went up 100% over the last six months.  Anyone who called for a buy (I did, FYI) looks like a genius.

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