Interesting research on Utica/Point Pleasant

http://www.itg.com/wp-content/themes/itg-decode/energy-2013/19-Manu...

This outfit, ITG, put together an interesting analysis of the Utica/Pt Pleasant in Ohio. I find the porosity analysis quite revealing, the best performing areas have the highest porosity. The northern utica has much less porosity, answering the question as to what is causing it to underperform. Based on my daily reading of the Utica (I need a better hobby), I now believe the two most meaningful factors are the depth to formation and porosity. Thickness of the shale and total carbon are just as high in the north, but the wells are not producing like the southern ones. This study shows Belmont, Guernsey & Monroe as higher porosity areas and the depth to formation is approximately 2,000 feet deeper than the north. 

Anyone have other observations as to what is the determining success factors?

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Permalink Reply by Ed Erickson on July 3, 2014 at 3:10am

Gentlemen, 
  In regards to the Northern utica and all this discussion isn't it difficult to determine what Halcon is really up to. As far as not continuing to spend money drilling in the Northern Utica doesn't their financial condition raise questions about their intent in the Northern Utica? If I was Halcon and was bleeding so much cash that i had to sell at least $350,000,000 in leases wouldn't I drill in an area where i can get product to market and increase my cashflow immediately? At the present time there are few pipelines to get gas to market in the Northern Utica. Couldn't the answer be  they are not in the financial position  to drill wells and  acquire land for pipelines to get product to market?

Permalink Reply by Dexter Green on July 3, 2014 at 3:25am

"In regards to the Northern utica and all this discussion isn't it difficult to determine what Halcon is really up to."

No.  They've told their investors what they're doing.  If they lie to their investors then it's game over. 

"If I was Halcon and was bleeding so much cash that i had to sell at least $350,000,000 in leases wouldn't I drill in an area where i can get product to market and increase my cashflow immediately?"

They left the Utica and instead put all their eggs in one basket: the Tuscaloosa Marine.  It was a risky move and not at all in line with the scenario that you offered above. 

" At the present time there are few pipelines to get gas to market in the Northern Utica."

Two things:

1. Trumbull and Mahoning county have pipelines to move dry gas

2. Pipeline development never starts before an area is derisked and a commitment is made by the driller(s)

"Couldn't the answer be  they are not in the financial position  to drill wells and  acquire land for pipelines to get product to market?"

That would be a fine answer if they hadn't drilled any wells yet.  But they did, and they were lousy.  So now we have to make our assumptions based on the data that exists rather than the speculation of what happens in the C suite.

Permalink Reply by Dexter Green on July 3, 2014 at 4:14am

If you're going to elevate this to the level of conspiracy to commit fraud then there's no argument or facts that I can use to convince you of anything. 

Permalink Reply by Joseph-Ohio on July 3, 2014 at 7:41am

Is the conversation elevated to that level ?

Does anyone know the facts ?

I certainly don't and can't make them out from only what is written here (on GMS).

'Lousy wells' could imply one thing to one person and another thing to another.

Once again subjective.

Maybe there was no intent involved in the statements as well ?

Maybe the CEO terms a well 'lousy' if it doesn't turn profit in two weeks and maybe turning profit in 12 months  (or whatever amount of time pending any given investor's perspective) is okay with others.

Maybe it's just not positive enough to suit the folks making the negative comments and those folks see more pluses somewhere else.

Being a northern tier landowner is the skin I have in the game and it just gets tiresome to read all the negativity when the resources are there in abundance waiting to be collected.

Wells are throttled back for many reasons as I've read here on these pages.

My reply only discusses that perhaps in reality there are other reasons for making negative statements about wells in the northern tier.

Being a layman I can't rule it out in today's business climate.

Permalink Reply by Dexter Green on July 3, 2014 at 7:56am

The choice of words used to describe a failure are subjective, but that doesn't change the underlying result.  You say you don't know the facts and ask if anyone does.  Well, yes, a lot of us do.  They're available to you and everyone else in the public.  There's no secret being kept from everyone.  The results speak for themselves.  That doesn't close the book on an entire area, because we have all seen how technology has revolutionized the industry.  But for now and the near term there simply isn't much going on.

Permalink Reply by Joseph-Ohio on July 3, 2014 at 8:02am

Now you're talking in terms I can understand again.

Most operative words I've found in your last reply are 'for now'.

Thanks for the perspective Dexter - you always are a good read.

Permalink Reply by Joseph-Ohio on July 3, 2014 at 8:32am

'Subjective words' are only worth what any given individual interprets their value to be.

Permalink Reply by Joseph-Ohio on July 3, 2014 at 10:50am
To be clear, I'm not disbelieving the production numbers reported to the ODNR or the production numbers reported by the ODNR - basically my points pertain to what the production numbers that everybody bases their opinion pertaining to the whole of the Utica northern tier represent - i.e.: are they representing a well's production that is being choked / throttled back - or full throttle production ? ?

Also if it is being choked / throttled back how can anyone tell how good or how lousy the well actually is ? ?

I think (from what I've read) one thing that is known is that the well is for sale along with the remainder of their position in the north.
Permalink Reply by David Perotto on July 3, 2014 at 11:29am

Joe,

Read this thread, this may be something that could be attempted in the north.

http://eaglefordforum.com/group/wilson-county/forum/topics/lonestar...

Permalink Reply by David Perotto on July 3, 2014 at 11:38am
Permalink Reply by Joseph-Ohio on July 3, 2014 at 12:01pm

Thank you again.

Permalink Reply by Summer Johnston on July 3, 2014 at 7:49am

Yeah, there's really no denying (cheating) the tax collectors. 

No government entity is going to roll with the numbers a company provides. They'll be confirming production numbers for themselves.

See, in my opinion, the first wake-up call was when Kasich stopped talking about all the money that was going to come in from the Utica. When the pols stop counting $$$--not a good sign.

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