What Constitutes an Economically Successful Utica Well?

Reviewing the recently released released 2nd Qtr production report I see that Halcon's Grenamyer well produce 5,451 bbl of oil and 64,638 Mcf over  85 days.I performed some quick calculations and this type of production would mean an approximate payout of about 5 years.

Then there was the Kibler well in Trumbull County with similar numbers.

Could this be why Halcon suspended operations?

What say you ?

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Permalink Reply by Paul Martinelli on September 12, 2014 at 9:06am

100bbld x30 x $100= $300K a month....with no decline it take 26.6  months to break even on a $8M well.  Who would take that risk, when there are better

returns available for your $8M

Follow the MATH!

Permalink Reply by Rich on September 12, 2014 at 12:41pm
Attention folks these are big company's they can show a thing called cost depriation for 7 to 10 yrs on all things involved on a well pad! Soooo they do not have to make all that money in two yrs!! It's called business accounting 101
Permalink Reply by Dexter Green on September 12, 2014 at 4:01pm

The decline will outstrip the depletion.  Also, depreciation is for physical assets, such as equipment.  Depletion is for the resource being extracted.  It's called oil and gas accounting 101.

Permalink Reply by Rich on September 13, 2014 at 2:29am
Cost depreciation has nothing to do with depletion of oil an gas! Now that's oil an gas accounting 101! Everything else from the casing to concrete to the seperators to welding rods are all part of the cost depreciation!
Mike MurphyPermalink Reply by Mike Murphy on September 12, 2014 at 10:45am

All I can say is ask RON he will have the answer I am sure

Mike MurphyPermalink Reply by Mike Murphy on September 12, 2014 at 1:05pm

OOPS no Ron E. on here lately ....must have gotten throwin off here again

GOOD LUCK TO THE PEOPLE UP NORTH
Permalink Reply by bo boboski on September 12, 2014 at 11:06pm

One thing we are not considering; If the 1st well on the pad can  produce enough to pay for itself in less than 2 years. that means profits for the E&P for the next 3 to 20 years. Even if it peters out/"decline curve" s early, they may be able to re-frack it and bring it back for a few more years .OR, with the pad/leased land /pipelines/roads all paid for, can simply drill another well on that pad at a greatly reduced cost,and another,and another, and more depending on the size of the unit.SO, their calculations of a profitable well may not be depending so much on what the 1st one does, but what the combined total of all the wells that can be drilled or re-fracked in that unit. It may be like Wallmart principle; Do you sell 20 of an item for a decent profit, or reduce the price and sell 20,000 of em for lots of profit?

Permalink Reply by Barry D on September 13, 2014 at 2:33am

bo,

That's probably the philosophy of Hilcorp in Poland, Ohio. The company drilled several wells at the site.

Isn't Hilcorp also drilling more than one pad in PA ?

Although Halcon drilled 2 wells at the Kibler pad and still suspended operations.

Permalink Reply by pat on September 13, 2014 at 4:15am

hilcorp has dozens of wells just across the ohio line in lawrence county. with the yeo well the laterals will go right to the ohio line.

PA DEP Oil & Gas Reporting Website - Welcome

Permalink Reply by Barry D on September 13, 2014 at 4:21am

pat,

Do most of the pads in PA have more than one well on them?

I wonder of the yeo well will be drilled because it is so near the Poland landfill sight.

Permalink Reply by pat on September 13, 2014 at 4:34am

they just put the pad in last month. they are well outside the 3 mile radius.the yeo well isnt but a mile from the ambrosia well. they have found  something out there, this is more than exploration.

Permalink Reply by Barry D on September 13, 2014 at 4:38am

pat,

I agree that Hilcorp appears to be satisfied with the production of it's wells.

I just wondered if the yeo property will see a pad soon due to it's close proximity to the Poland landfill (the whole earthquake thing you know).

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