Gulfport Stock surges after Shugert 1-12H test results are reported

More good news for the Utica:

Shugert 1-12 Results

  • Gulfport's Shugert 1-12H tested at an average sustained 18 hour rate of 28.5 million cubic feet ("MMCF") per day of natural gas, 300 barrels of condensate per day, and 2,907 barrels of natural gas liquids ("NGLs") per day assuming full ethane recovery and a natural gas shrink of 10%, or 7,482 barrels of oil equivalent ("BOE") per day.

 

http://seekingalpha.com/news-article/4909791-gulfport-energy-report...

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Permalink Reply by Buz on November 28, 2012 at 7:01am

WOW  THATS  AMAZING ! Land just went up in that area.

Permalink Reply by Schnoozie on November 28, 2012 at 7:59am

Right now the POTUS is sitting high on his throne, trying to find a way to kill this or make it his.

Either option will do just fine.

Permalink Reply by jeff lavoie on November 28, 2012 at 10:21am
I would like to know the calculation of the royaltys on this well, it must be truly amazing,Sounds like it is one of the best wells drilled yet.
Permalink Reply by Billy Park Whyde on November 28, 2012 at 11:44am

Questio, when they report this " 7,482 barrels of oil equivalent ("BOE") per day." is that a figure based upon B TU equivalent, dollar value  as equivalent of oil prices?  Can anyone break this down say in  a royalty calculation say as a landowner in the unit say 100 acres of a 1280 drilling unit?

Permalink Reply by Bluflame on November 28, 2012 at 1:17pm

Billy,

  This is the best well yet drilled in the Utica by ~50% and maybe the best shale well period drilled to date. Ironically, the former king was Shugert 1-1H @ ~4950 BOE/day, only a short distance east of this well. Third is Gulfport's Wagner well about 10 miles north and 4th is CHK's Buell Well at an "anemic" ~3000BOE/day. All these are initial production numbers.

  Yes, the BOE number is calculated as a BTU equivalent.  At reported production, 20% gross royalty (for simplicity), full ethane recovery (not possible until midstream complete and connection to ATEX pipeline) and 100 acres in a 1280 acre drilling unit.

  Best guess at gross daily well  revenue at current pricing is $237M/day. Assuming 20%  royalty and 100 acres as noted, the daily royalty computes to $3703, or $1,351,364/yr. This assumes peak production is sustainable at least a year, not an unreasonable assumption with the very high well-head pressure (5200PSI). 

  There will be a production decline, but that is an unknown. But this is further evidence of the location of the "Utica Sweet Spot"

IMHO,

BluFlame

Permalink Reply by Jim Litwinowicz on November 28, 2012 at 3:44pm
Blueflame; at $237,000/day at 20% royalty works out to $47,400/day or $1,422,000 per month, assuming no deductions allowed. I'll be spending a lot of time in ht area looking for a farmer's daughter!!
Permalink Reply by Jim Litwinowicz on November 29, 2012 at 3:30am

If one assumes that these 7,482 BOEs/day sell for $85/barrel that would work out to $3,243,447 per month at a 17% royalty with no deductions........or $3,815,820 per month at 20% no deductions.  Not sure that that is the true value of the BOEs.  Even at 3/4 that or $63.75/b it works out to $2,432585/ month  @ 17% or $2,861,865/month @ 20%.

Permalink Reply by Bluflame on November 29, 2012 at 6:05am

Jim,

  You need to look at each component (oil, NG & NGL's) to get a valid revenue number. The BOE number is a BTU equivalent, so multiplying by $85 inflates the actual revenue.  

        My model also considers that the landowner only has 100 acres in a hypothetical 1280 acre drilling unit. I believe your corrected # of ~$1.4 million/month assumes only one landowner in the unit, which I believe is correct for the Shugert well.  This well is a huge natural gas producer. I used $3.75/MCF for NG, $85/brl for oil and $35/brl for NGL's. Looking back, I neglected to deduct from NG for NGL's, but that would only reduce the well revenue number by ~$10K/day and the royalty by ~$2K/day, chump change in this model! Gulfport will not be able to achieve "full ethane recovery" until Mark West's midstream processing in Harrison Cty is on line and they are connected to the ATEX ethane pipeline.

   Also, I've assumed a "gross"lease versus net.

   Any way you cut it, Mr Shugert will be lighting his cigars with $100 bills (if he isn't already)!! The guy has the two biggest wells in the Utica, and things are just warming up!

BluFlame

  

Permalink Reply by David Perotto on November 29, 2012 at 7:00am

Blueflame,

Wouldn't the  Shugert 1-12H be just one lateral on the pad? In other words one well might be approximately 125 acres and not 1280? I could be wrong, but aren't these results from just one lateral?

Permalink Reply by Bluflame on November 29, 2012 at 7:11am

David,

  I was just responding to a hypothetical question by another GMS member in my first posting. The drilling unit sizes have been all over the map. However, Gulfport seems to be progressing to bigger units. Also, I've seen instances where the initial unit is "small", and gets expanded when they are successful and want to drill multiple laterals from the same pad.

   BTW, the two Shugert wells are from two different pads.

BluFlame

  

015334grltd9mPermalink Reply by 015334grltd9m on November 28, 2012 at 4:38pm

"Incredible."

Permalink Reply by Buz on November 28, 2012 at 5:45pm

They have not hit southner tuscawas yet look out!!  THE SWEAT SPOT I BELIEVE!!

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