Stacked Gas In Place Butler County

I have excerpted pdf files from the original Range 10/30/13 presentation using the "print to PDF" selection under the Print command and "printing" the individual pages.

I have included the three zones - Marcellus, Utica, and Upper Devonian (Burkett) and a map of Butler County.

I thought that this would be of interest to the Butler County participants here.

If you want to have all of the files open at the same time, right click the pdf files and save them all together.  Then, open them all from that location.

I attached two images so that you can see where I'm going.  Use the jpg files for higher resolution.

Phil

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Permalink Reply by Todd on December 4, 2013 at 1:07pm
Phil,
How did you come up with those simple dry to wet gas conversions of 1.5 and 1.8 respectively? Of course, those conversions would only apply to the Marcellus and UD.
Thanks!
Todd
Permalink Reply by gary SWF on December 4, 2013 at 5:12pm

Phil.....Thanks for all of the information.......I am having trouble following your example above. Could you give an actual (made up ) example.....maybe I could understand the equation better then.....many thanks in advance, ....Gary

Permalink Reply by Philip Thackray on December 4, 2013 at 1:26pm

Todd,

If a unit is done “correctly” that is Number of wells = Unit size (acres)/80 acres and no one is stealing from your unit and your unit is not stealing from someone else's unit then unit size does not matter.  However, in practice, strange unit formations and well placements can certainly affect individual land owners inside AND outside the unit.

That is based on a typical well draining 80 acres.  Longer laterals do not help the individual land owner because the unit grows in proportion to the length of the wells.  The trend to closer spacings does seem to help the landowner as more gas/acre can be extracted.

The Rex and Range multipliers come directly from the presentations.  For example in the most recent Range presentation November 18, 2013 page 42.  The GIP numbers would represent wellhead Mcf regardless of the composition.  So this graph shows the upside from wellhead Mcf for a typical Marcellus Wet well in the Range lease-hold area.  Rex’s wells have very little condensate and less NGLs (and less total volume).

Phil

Permalink Reply by Todd on December 4, 2013 at 1:42pm
Phil,
Unfortunately, Chesapeake is not yet practicing reduced cluster spacing and they acquired my lease. Unit size matters in the short term if all the wells are not immediately put into production and this is typical for CHK. I like to look at the near term first and calculate how much one well will create in royalties and if the unit is 450 acres instead of 900 acres, you get twice the decimal interest in the unit and, hence, twice the royalty money. Therefore, it will conceivably take longer to get the same amount of
money from a larger unit. But, yes, it will even out over time.
Permalink Reply by Philip Thackray on December 4, 2013 at 1:59pm

Todd,

The time placement of wells would certainly matter.  I'm in that situation right now.  I'm 80 acres in a 624 acre unit with two producing Marcellus Wet wells.  So the cash flow to each landowner is not what It would be if all 7 or perhaps 8 wells that the acreage could handle had been drilled at the same time.  But I'm in no hurry, the only chance for ethane recovery is years away.

Phil

Permalink Reply by Todd on December 4, 2013 at 2:11pm
Phil,
I have 70 acres in a 460 acre unit with only one wet UD well completed but waiting on pipeline. What is the ratio of dry to wet gas coming out of your wells if you don't mind my asking? The WVDEP shows the calculated dry gas for the well but that's all.

Thanks, Todd
Permalink Reply by Philip Thackray on December 4, 2013 at 5:17pm

Todd,

I wish you an expedited pipeline!

The wells went on line early October.  The first check and report should come near the end of this month.  I can report then.

So CHK drilled a UD (burkett? Rhinestreet?) well on your unit?  Have they talked about other shales?  How many UD wells would they put on your unit?

My main computer died - I may be without some resources for a day or two.

Keep us updated!

Regards,

Phil

Permalink Reply by Todd on December 4, 2013 at 6:40pm
Phil,
I was wondering what happened... Your computer crashed?!? Yes, CHK drilled an UD Rhinestreet well. CHK is having to divide their units into North and South units in WV because WV law states that a unit for a deep formation can not exceed 640 acres.
So, I'm in the North Unit. They may drill 3 UD or Marcellus wells to the NW in my unit. However, their main focus is the prolific Utica in Hancock and I would most likely have 3 Utica/Point Pleasant wells in my north unit. Hancock is the only county in WV in CHK's Utica division. The Utica is very thick though so they could drill the Utica at various depths.
Who is your operator and what part of Butler County are you located in?
Do you have any idea what the initial open flow was on your wells?
Congrats on your 2 wells and pipeline connection!
Todd
Permalink Reply by Philip Thackray on December 5, 2013 at 6:58am

Todd,

UD, Marcellus, Utica...I wish you many facies!

This is Forward township, Butler County, Pa.  I signed with Phillips in 2008 and then they were bought by XTO.  So now I'm XTO.  That is good because they came in here and built their own cryogenic plant, pipelines, compressors etc.  In fact, the compressor is running on this branch of the gathering system.  I was told that they literally want to "suck" these wet wells, otherwise the subcomponents might fractionate in the vertical portion of the well.

XTO being a part of Exxon has no reason to tout their results from this tiny patch that they occupy in Butler County, PA so things like IP are not published if indeed they even measure such things.  Anyway, the need to boost stock prices makes me somewhat suspicious of other companies numbers.

My home computer is going to the repair center today - power supply I think.  No "crash" just would not turn on.

Phil

Permalink Reply by Philip Thackray on December 4, 2013 at 6:04pm

Gary,

Take a location where Range says the Marcellus has 100 billion cubic feet of dry Gas In Place per square mile.  Since gas is priced in 1000 cubic feet quanties we want to divide that number by 1000 so we have 100 million thousand cubic feet per square mile.  Assume that 30% of that can be extracted so there is 30 million thousand cubic feet/sq mile that can come to the surface.  For $4.00 /thousand cubic feet of gas, that means there is $120 million dollars of extractable gas in a cubic mile.  Most people have acreage (not mileage) so to convert that number to per acre we divide by 640 which yields $187,500.00 dollars per acre.  If you have a 15% royalty then $28,125.00 per acre of that is yours if there are no deductions.

I assumed dry gas so there would be limited deductions.

For Range wet gas multiply by 1.8 but also multiply by 0.82 to account for about 18% deduction (compression, cryogenic, transportation etc) so:

Range customer = $41,512.50 per acre

and:

Rex customer = $34,593.75 per acre assuming the GIP in place for either scenario is 100 billion cubic feet per square mile.

Multiply those numbers by your acreage and there you are.

If you are in a stacked play area CONGRATULATIONS - keep calculating!

If you calculate these numbers from the EURs in the Range and Rex reports you get numbers as much as twice as high.  I really don't know what to believe but I do think the calculation from GIP (above) is conservative.

Phil

Permalink Reply by gary SWF on December 5, 2013 at 8:37am

Phil,...Thanks...Gary

Permalink Reply by Trapper on December 4, 2013 at 6:26pm

Philip you da man! your mistaken post has graduated to "Featured Discussion" status. Congrats and thanks for some great info!

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