we are wondering why our royalties continue to drop we have been receiving them for 3 years we were told after the first year it would level off and the second year would be half of what the 1st year but that has not been the case it is now about a third and it is continuing to drop at least 100$ every month some times more is it possible that they are not letting it produce or is it really not producing just wondering if anyone else is dropping we are in noble county
Are these Utica or Marcellus wells?
The dreaded decline curve is to blame. Every well is different, and predictions are just that....guesses really as to what will happen over the productive life of the well. Some wells show HUGE declines of 60-70% in the first year, while others much less....by year 4 or 5, the well might be producing 20% or less of the original IP, and that might remain relatively flat for the remainder of production....a flatter decline curve from the first few years.
The price also figures in the equations, along with the practice of throttling (or choking) the well to meet pipeline obligations or manage the NG price environment. A better way to track decline is to track the actual production (in Mcf) over the years, as that will give you a more realistic decline than using royalty $$.
There is the possibility of new wells drilled there if the producer viewed the well(s) as profitable. There is also a chance they will drill to a different formation, but that could be years away.
Gas royalties are a windfall, but with a finite lifespan....hopefully the $$ have improved your life situation and you have maybe stashed some away for the later years when the numbers decline.
spot on about putting it away. been to seminars with the "experts". constant downward price pressure due to technology and lower production costs add volume to market coupled with decline curve equals short royalty pay period at lower price. classic commodity behavior with a short market for royalty owners as once our "crop" is produced our fields are played out. historically it has always been this way in gas plays to some degree or another. the takeaway is plan accordingly.
I have heard that these companies, if they want to, can go back and refrack a lot of these wells and obtain production numbers close to the original production. I am yet to see that reflected in my royalties as far as I know, but I hope to see it someday. Anyone else heard that?
I never thought our wells would drop off so much in Jefferson County, ross twp utica formation.
1st quarter 1017- 250180
2nd quarter 2017-309960
3rd quarter 2017-222140
1st quarter 2018-28891
I know wells decline in pressure, but this seems like a lot. something just doesn't seem right.
It seems like there is more to your production drop off than a typical decline curve would suggest. A ~90% decline in a year is astronomically high, and in following Utica wells in North Central PA, I have not seen one drop off like that.
Have some/all of the wells been shut in? Are they drilling new wells on the same pad? Many new wells in the immediate area coming on line? Pipeline restrictions? Are the wells producing for the full month?
I find it more useful to track the daily production average numbers when considering decline (total produced for the month / number of days produced that month), so if a well is offline for 10 days in a month, you don't consider the monthly total only, skewing the results.
Seems like throttling could be a cause, but to choke a well this much jeopardizes total lifetime production, and I have read the well may not live up to full expectations when throttled this severely.
All of this is pure speculation on my part. If you know anyone else in the area in a different production unit, see if they might share their well output numbers with you, to see if yours is an anomaly, or are all the wells in this rock depleting as quickly.
In your post, you stated 'wells'.....how many wells' production are included in your numbers?
Are they in the same production unit?
And to confirm, these are Utica wells?
Lastly, do you know the lateral lengths of the wells?
I have been gathering data on Utica well declines, and I would appreciate adding yours to my spreadsheet. Thanks!
Hello Bullfrex, Those numbers are for just 1 well . the 6-h it is in the point pleasant formation and if I am reading the info right it is 95.71 acres- 3711 ft. API# 3408120515 my unit also includes the 1-h which is 148.61 acres-5950 ft.that one is in the utica, the decline is similar on that well also..
i have not heard of any refracking done yet. the theory with sliding sleeve bridge plugs would allow for rework later as they remain in the well and are produced thru until reclosed with coiled tubing tools allowing for less cost for refrack. most are using plug and perf with millout removal of plugs. until gas gets more scarce well into the future i would not count on much rework on old wells being done.
Thanks for the reply Old Timer. the only thing i can think of is that these wells were one of the first wells that were drilled in that area. The wells were drilled in 2012 I think. maybe that has something to do with it? it is the Ascuncion west unit. I am in the 1-h and 6-h.
I checked some of the other wells in the area and they seem to be doing good, even the ones that have been producing for a while... but it seems they have been drilled more recently..
there is a big difference in older wells as the completion designs have changed significantly in shale wells. early companys generally fractured larger wider spaced primary fractures using larger proppant sizes. today the common method is refered to as "intense stimulation". the goal being many more secondary fractures using finer proppants in larger amounts. the goal being to create more surface area for gas flow over the entire lateral. like a sledge hammer on plate glass versus a few big cracks. well production is increasing in the same formations as a result .
Thanks for the info, Old Timer. I'm not gonna pretend I understand 100% of what you're saying, but I get a lot of it haha. Sounds like you have a lot of knowledge of drilling methods.
you would think that when an oil and gas company returns to an existing well pad with wells that have dropped off signifantly they would refrack while drilling new laterals on the same pad right old timer?