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 time will tell on July 2, 2014 at 3:24am

Yes Joseph , they will get it at some point , the fact is that there is

more product in a porous reservoir than a tight one .

You will see the tighter formations and oil mature locations  developed

later on .

 

015334grltd9mPermalink Reply by 015334grltd9m on July 2, 2014 at 3:31am
KIBLER?
Permalink Reply by Dexter Green on July 2, 2014 at 3:51am

Disaster?  Outlier?  If that was the norm we wouldn't even be discussing the future of Trumbull or Mahoning.  There'd just be rigs stacked to the moon waiting to get in. 

Permalink Reply by David Perotto on July 2, 2014 at 3:53am

Over 10,000 Barrels of oil in 4th qtr 2013. I would take that well results on my property! I wonder why that one is so good and Halcon's other wells in Trumbull county are not producing the similar results. They havent said much about their wells..

 

Speaking of Halcon, I looked back at one of their press releases, the early results from their NE holdings ( Mercer & Venango), they said this in June 2013:

The data acquired to date is encouraging.  Based on petrophysics tied to core data, the original gas in place per section is 100 Bcf at the Allam 1H well and 117 Bcf at the Phillips 1H.   The Allam 1H has 266 feet of net pay with an average of 4.4% effective porosity and approximately 75% hydrocarbon saturation, while the Phillips 1H has 304 feet of net pay with an average of 5.1% effective porosity and approximately 72% hydrocarbon saturation.  These values compare favorably to other prolific shale reservoirs.  The Allam 1H and the Phillips 1H wells are both located in the gas/condensate window of the play and have BTU contents of 1,210 and 1,250, respectively.

Permalink Reply by Dexter Green on July 2, 2014 at 4:05am

"Over 10,000 Barrels of oil in 4th qtr 2013. I would take that well results on my property!"

Yes, I imagine anyone would take those results since they're, you know, free.  Would you pay to drill that well on your property?

Permalink Reply by David Perotto on July 2, 2014 at 4:49am

Well you must look at 15 years or more of income. And yes they will drill. If a well cost approximately 7,000,000 and they are get 2,000,000 in the first year and 1,000,000 average for the next five, they have made back their investment. Year six on out is profit. That is just the oil and does not include wet gas or dry gas. So yes they drill that well, no doubt about it.

Permalink Reply by Dexter Green on July 2, 2014 at 6:18am

"And yes they will drill."

Then they'll go out of business.  Quickly.

"If a well cost approximately 7,000,000 and they are get 2,000,000 in the first year and 1,000,000 average for the next five, they have made back their investment."

No.  Just...no.  That's not how it works. 

"Year six on out is profit. That is just the oil and does not include wet gas or dry gas. So yes they drill that well, no doubt about it."

David, honestly, you seem like a nice chap, but you don't understand how this business works.  If you drill a well that isn't in the profit phase until year six you're out of business.   That's not even up for debate.  Beyond that there is no decent accountant who would ever, ever let you say "1,000,000 average for the next five" without either telling the CEO to fire you or committing seppuku in front of you, just to spare themselves the pain of having to explain why averages don't work in financial accounting.  HK drilled two Kibler wells.  They will make a little money on one of them as the production was pretty good.  They will lose their shirt on the other one.  That's not a good business model.

Permalink Reply by David Perotto on July 2, 2014 at 6:32am

I agree on the second, but the real question is what did they do on the successful one and replicate that going forward. As their CEO said, they cant afford to drill shitty wells. Most of the wells in Trumbull have been just that, shitty. The hydrocarbons are there, can they be harvested economically, that is the real point to this.

Permalink Reply by Dexter Green on July 2, 2014 at 6:50am

" The hydrocarbons are there, can they be harvested economically, that is the real point to this."

All evidence to the contrary.  If that were true they would be drilling like they are in Carroll.  One economical well is but a single and almost entirely useless data point in a sea of hard to decipher data points.  One good well amongst several bad followed by abrupt exit from an area is usually not a positive sign.

Permalink Reply by Joseph-Ohio on July 2, 2014 at 2:49pm

Regarding the economics I'll say this much as a layman with some significant experience paying for things like domestic services (natural gas, electricity, water, sewer, etc.). Based on my experience, on the long term prices rise - continuously.

A big part of prices rising is to enable essential businesses to stay in business.

Fuel for heating, transportation, freight , etc. are essential, cannot do without commodity elements lieing at the heart of our society and the raw material resources, although massive I'm told, are also finite.

Demand continues to rise as well.

Prices will rise to enable 'Majors' to stay in business no matter what their overhead is - they will simply raise the price as required to not only stay in business but also to reap greater rewards.

We consumers are a captive market.

All only IMHO.

015334grltd9mPermalink Reply by 015334grltd9m on July 2, 2014 at 2:14pm

David,

It is fruitless to debate the incognito.  If anyone has credibility here it is you and your proven financial savy in NY.

Permalink Reply by Dexter Green on July 2, 2014 at 3:40pm

Financial savvy is wonderful and I'm sure that Mr. Perotto has it in spades.  But oil and gas accounting is a different animal and his estimations were simply incorrect.  This is a forum for people to speak freely.  That doesn't mean there must always be agreement, rather it often means precisely the opposite.  If you had $10,000,000 to spend on a well and you could pick any spot in the state where would you go?

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