Replies to This Discussion

Permalink Reply by Craig Stull on May 31, 2013 at 8:10am

Marcus, Tell me why I knew you would be the first to comment on my statement from above!!  L.O.L. 

Permalink Reply by 0i7okn54zwbdo on May 31, 2013 at 9:38am

Intuition would be my guess.  Hey, I read on here that these wells will make a guaranteed $1,000/acre/month for years with no decline.  Maybe Trumbull county needs a Porsche dealership...

Permalink Reply by john p halloran on June 1, 2013 at 4:15am

Don't have a a clue what's going to be in it,best guess dry gas.Just a guess.

Permalink Reply by john p halloran on June 1, 2013 at 5:02am

Ya,I know but according to the o/g co.there's nothing here to drill for.LOL. That's why they are putting in new pipelines,dah!!!!!

Permalink Reply by Amanda on May 31, 2013 at 8:15am

Craig, She signed with BP with the first group signing like my Mom did with ALOV.  & That pipeline that they are putting in is holding me up from getting to work & school!  They need to speed it up a little!  LOL!  Just kidding.  Nah, I just take an alternate route. 

I didn't realize that was a BP pipeline that they were putting in up there.  It is bending and following Route 5, not 88.  They were just before the underpass of the railway this morning on my way to work.  They are actually working pretty quickly on the contrary to my little quip above. 

Has anyone heard any reports of the well up by Webber Cole in Kinsman? 

Permalink Reply by EG Lind on June 10, 2013 at 4:43am

With BP putting up shop around in the Kinsman area -

How much are folks leasing their land for?  

What is a good Royalty number these days?  

BP tossed an initial offer to me of $3900/ac to lease and 18% percent royalties.  

 (In round numbers - at 640 acres or so, that means the are paying up front nearly $2,500,000 just to speculate/lease for a well site and that doesn't include all the other costs of engineering, legal, pipeline, and actual deep well drilling = is that another $2.5Million?)  They must know something. . . . 

Permalink Reply by 0i7okn54zwbdo on June 10, 2013 at 6:26am

The initial drilling cost is ~$10,000,000.  That tends to drop quite quickly once they've gotten the formula down. 

Permalink Reply by EG Lind on June 10, 2013 at 10:09am

So if they drill 5 holes in one 640ac Unit, what do you suppose would the on-site costs be in total minus the leasing? 

Permalink Reply by 0i7okn54zwbdo on June 10, 2013 at 1:36pm

Well, one pad is obviously more efficient, but the problem is that they haven't drilled enough of these to fully understand the best way to do it.  So initial wells are going to be much more expensive.  CHK has their costs down to maybe ~$6,000,000 per well at this point but nobody in Trumbull is there yet.  If BP sees value in their acreage they'll drill the costs down eventually.  Halcon expects costs at Kibler to be $12,000,000 per well which is very high.  

Permalink Reply by EG Lind on June 11, 2013 at 1:01am

So that leads to two questions:

Would not one horizontal well be enough to source a single 640 acre Unit? How far to the 'side' can they maneuver?  Or are some Units so rich (or so restricted) that it makes sense to drill multiple holes? 

And lastly: to drop ~$12 million into a 640 acre parcel - that would mean that every well should produce at least, say $20 million in sales, on average across the 'play'?  Some being much less and some being much more. Nobody would risk $12million just to make $1million.  Is that a fair guess as to the value of any well drilled in the NE OH area? 

Permalink Reply by 0i7okn54zwbdo on June 11, 2013 at 2:35am

To question one: no, one well would not fully drain a 640 acre unit unless it was a very long, very skinny unit and the lateral was 5x longer than the ones they're drilling now (which will not happen).  According to Gulfport they're seeing fracturing and drainage from an even narrower area than initially thought.  They're asking for shorter setbacks because they feel that to effectively drain an area entirely they should drill on 300' spacing. 

To part two: no, they absolutely will lose money on some of these wells, including the first round.  Halcon expects to lose $8,000,000+ on the Kibler unit over the life of the well(s).  Companies will absolutely spend the money to figure out how things work long term.  Look at how much money Devon threw down the drain in the western part of the play.  They walked away and told shareholders 'meh, that's life'. 

Permalink Reply by EG Lind on June 11, 2013 at 2:59am

Thanks so much for the info - you know this business pretty well. (that is my pun for the day.)

I am trying to figure out the estimated average _gross sales_  from wells in NE OH - to determine a average per well lifetime value.    All oil and gas; full life time of well, 0% change in market prices.  Any thoughts?   

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