CARROLL COUNTY CONFIDENTIALITY AGREEMENTS

For a county that has the most wells drilled, it is certainly quiet on this site.  I would love to hear how much people really get per acre and how much people are being offered for their mineral rights.  It really would help in making a decision on whether to sell mineral rights or not.  It must be confidentiality agreements keeping everyone quiet.

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Permalink Reply by mary ellen on March 4, 2014 at 10:56am

Thanks. That's great advice.

0i7okn54zwbdoPermalink Reply by 0i7okn54zwbdo on March 4, 2014 at 7:24pm

"Remember, these well pads are built for 40-50 year lives. Really overbuilt."

This is the only part that I disagree with you about.  These wells will not last that long.  They likely won't last half that long.

Permalink Reply by INVICTUS on March 5, 2014 at 4:30am

I'm curious why you don't believe this? Are you referring to draining the area of the recoverable volume of oil/gas?

They are really no more than flattened areas with plenty of Limestone, well contoured and excavated peripheries.  The plumbing on these things is all very high grade, Not much to go wrong in 50 years, just some maintenance of roads, ditches. No buildings onsite.

Even the drainage surrounding the inner perimeter of pads is built to control water accumulation and runoff via valves.

That's the construction part.

The O/G companies can come back, rework/refrac, whatever, the existing wells,

Further, there is usually ample room for drilling;

Either new laterals in between the current 1000 spacings;

Extend lateral lengths;

Drill new outer laterals.

MOST importantly, drilling other formations under the present ones. The Trenton/Black river remains largely untapped in our area.

Productivity wise, I DO believer these things are front-loaded for productivity (very steep decline curves), however, future advances in reservoir recovery are certainly being worked out.

I'm still amazed that expected ultimate recovery leaves most of the oil/gas in the ground, unrecovered.

There is much work to do after the initial "blow" of 5-10 years.

To your point, I very well may be wrong. I've come to the conclusion that exploration people are a little bit crazy, hugely optimistic, somewhat reckless.

Perfectly suited to drive innovation and progress.

Permalink Reply by mary ellen on March 5, 2014 at 9:53am

I think you're right.  Looking at the minerals beneath our property, we see both utica and marcellus structures, let alone other formatiions such as Trenton.  I've heard from credible sources that they could extracting minerals for 50 plus years. This sounds overly optimistic, but who knows what technology will bring.

Permalink Reply by Bill Barnaby on March 5, 2014 at 7:24pm

Many of these wells are large, if I was in a well that only took a 50% decline in a year I would be a happy camper.

Permalink Reply by mary ellen on March 5, 2014 at 10:45pm

It seems to me that the early reports were for show, especially Gulfport.  Now, unless they are on accessible pipelines that can handle the volume, most Utica  wells in Carroll county have been chocked back.  Is this the decline that people are seeing in the early wells.  Choking, not major decline. Waiting for infrastructure.  

Permalink Reply by Dott on March 6, 2014 at 12:41pm

The O&G company I lease with told me that dry gas does have a steep decline curve but that wet gas areas are different and have a lot of pressure and do not have the same decline curves.

Permalink Reply by mary ellen on March 6, 2014 at 12:53pm

Thanks. That's good to know since we are in the wet gas area.

Permalink Reply by INVICTUS on March 6, 2014 at 5:27am

My working expectations are 80% decline in first 24 18-24 month under the following assumptions:

- The well is running nearly full throttle (Which apparently wrecks them, they clog up)

- The well the completions techniques are still in a state of experimentation. the ability to only pull 5-6% of the oil & 20%-30% of the gasses from the reservoir is rather pathetic, Yet, that's the reality of current technology and recover technique. to go back and rework these wells after they appear to crap out must necessitate a pad design beyond a 5-10 year period.

If they choke them back, the initial production decline is significantly mitigated. Wait a while longer for your loot, let the wells rest a lot more, get longer cash flows.

If these folks are serious about this new game-changing set of techniques, technologies, and subsurface mapping, they will need a stable platform from which to implement these processes & procedures:

A 50 year pad.

Utica Shale is right. The hope for long term cash flow mentioned above is highly speculative in nature.

And I agree with the statement that criticizes upfront bonus money because "the royalties will make up for the lower bonuses", i.e., the real money, as he puts it.

The old saw "a bid in the hand is worth two in the bush", or get the cash upfront.

My answer was and is to look at prior internal rates of return and net present cash flow from the prospective of knowledgeable investors with historical results - See what they experienced.

And my realistic expectations still stand because they are conservative.

But I'm telling you that people in the know are buying into these things for 20, 30, and 40 year cash flows; not because they believe that the INITIAL PRODUCTON is going to keep on cranking out like a Jed Clampett gusher, year after year. It won't. It will decline the large amounts mentioned above after initial production.

The game changer is the disruptive technologies, the new or modified recovery techniques, the new well spacing regulations and relaxations, the different formations under the current operations that remain untapped.

You need the 50 year pad to try to do this. No guarantees. Very speculative. MAYBE delusional.

Once again: Nearly ALL the product is still left in the ground. Let's go back again and again and get it.

I'm not selling my interest. I didn't pay anything for it. The cash flow will only be positive for me forever.

I have zero risk.

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