Replies to This Discussion

Permalink Reply by Ann Ticopa on August 17, 2013 at 10:39am

Whether it was wise to buy ERI in the first place is open to question.  But did your comparison include SWEPI's ERI "legacy wells"?   If one was to rank Talisman based on their ERI legacy wells in NE TC, they would also rank low. 

It would be interesting to know how different operators do when drilling in areas with similar productivity potential. 

Permalink Reply by Gringo on August 17, 2013 at 12:42pm

It's interesting to see a pad where ERI drilled, then Shell drilled more at a later date how shells IP is much better. Shells #s are getting better, still marginal but better. One big disappointment is the Burket looks like a bust.

Permalink Reply by scott brion on August 18, 2013 at 6:34am

I included all wells, and have not done a lot of specific analysis of breaking out older ERI wells and newer Shell ones, but I do not see any dramatic change in Shell/ERI wells over time.  In general wells performance has improved for all operators over time, but If anything Shell's newer wells do not appear to show as much improvement as is apparent with other operators.   Chief and EXCO are the most dramatic examples I can think of where the latest wells in the same area are far outperforming older wells.   A lot of Shell's newest wells have not been spectacular and have underperformed what would have been expected based on existing production and anticipated improvements from enhanced frac design, seismic and longer laterals.   Easily could be something going on that I don't know, but from the production data on a lot of wells Shell isn't leading the pack in results.   I find it interesting that Ultra has stopped participating in some wells.  They clearly think Shell is under performing/making bad decisions.

To your second comment,  there is a lot of variation in wells even on the same well pad so it is hard to make a specific analysis between operators in similar areas, but I suggest that EQT in Duncan Twp, Seneca in Covington & Bloss and Talisman in Bloss & Ward Twps and even Novus in Sullivan twp have all shown better average results than SWEPI has in any similar area.

     

Permalink Reply by Ann Ticopa on August 18, 2013 at 8:59am

"I find it interesting that Ultra has stopped participating in some wells. They clearly think Shell is under performing/making bad decisions.

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From the transcript of Ultra's Q2 webcast:

Q: Okay. Jumping over to the Marcellus, what's the completion schedule look like for the second half of '13 for Shell?
A:Shell is a little bit back loaded this year in 2013, from a completion and online standpoint. So we do expect a few more wells coming online, primarily in the third, late third quarter to early fourth quarter. The overall Pennsylvania program is pretty balanced.  Anadarko was front loaded and Shell is slightly back loaded for the year.

Q: When do you start to look at the Marcellus versus the Pinedale in terms of a potential increase [in activity]?
A: Ron, I think what we're doing now is we're positioning ourselves. We're trying to figure out what we do with our cash flow generation calendar 2014, and there's going to be minimal expenditures in the Marcellus. ...  We don't plan to mount operate [a] program in the Marcellus on our acreage. Anadarko doesn't plan to, at this point in time. Shell appears to have some activity, and we'll see how much of that we participate in, given their well costs.

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It's not my intent to be an apologist for Shell/SWEPI, but it appears Ultra decided that, next year, their resources would best be invested in the Pinedale rather than the Marcellus.

Permalink Reply by scott brion on August 19, 2013 at 3:01am

Not sure what you intend with your last paragraph?  Sorry if I am coming off as having a bias against Shell.  It is not my intent to beat up on Shell or any other operator, but rather to frankly assess local development.

As you have been following the conference calls you have seen that Ultra has been pretty critical of Shell continuing to drill unecoonomic wells to the point of cherry picking the wells in which they participate.  Ultra does not appear to have much if any say in what Shell does in terms of development.

Ultra is not devoting resources to Marcellus because it is not profitable to do so even at the expense of losing working interest rights in wells.  Most of their Anadarko operated acreage is HBP and the Tioga & SWEPI operated acreage is not economic at $4.00 gas.   UPL has in the past year or so indicated they think that a $5.00 price is needed to justify Marcellus development for them.  This figure may be lower now as most operators are seeing improved well costs, but it is not likely to be dramatically lower today.

Permalink Reply by Ann Ticopa on August 19, 2013 at 11:30am

No, I haven't been following the conference calls - no broadband.  Found the transcript when Googling for something I recalled having read about the JV,  

My last Paragraph was sort of a disclaimer.  I'd already made other "they're not that bad" comments about SWEPI.   It does seem like the primary reason Ultra isn't investing in TC right now is because they have a profitable place to spend their money. 

Incidentally, Ultra did say they had found some Utica gas, but it's not delineated.  From the context I take that to mean that it's scattered. 

Permalink Reply by Gringo on August 19, 2013 at 1:43pm

Ann, the good news was the utica part.ultra stated nearby wells they were monitoring, that would be the Gee, Neal,etc. I'm hoping this confirms my suspicion that those wells even thought the permit says target formation Trenton, the Utica is really the target. My feeling is not delineated refers more to how much of the JV land might be prospect. I'm out on a limb here but looking at the old Utica maps which showed TC and farther east being over mature. I believe they feel if middlebury is good their Marshlands are good too. The Q would be all of Shell/JV land farther to the east.

Permalink Reply by Ann Ticopa on August 19, 2013 at 4:39pm

Gringo:  I hesitated posting that because finding Utica can be one thing and finding commercial amounts another.  Ultra also mentioned that they will be doing seismic in the Marshlands area. 

What I though delineate meant was to, essentially, find the boundaries.  When SWEPI was going into Lawrence County, there was an article that quoted a spokesman as saying that they would be drilling to find the boundaries (or similar word) rather than just drilling the "sweet spots".

Maybe at the end of the year SWN will say what their plans are for the Chesapeake TC acreage they bought.  And, afaik, Exxon/Mobil still has their DCNR lease.    

Permalink Reply by Gringo on August 19, 2013 at 11:30pm

Knowing what we know it it 2 issues,on the marshlands it is marginal but at the right price ultra would move forward, the seismic there will determine how much more is marginal,but usable marcellus. Going west into Potter the marcellus becomes unusable. It will also give a look at the utica there. The Utica being the opposite farther east being over mature. Ultra rides to coat tails for delineating the JV land. That was my take.

Permalink Reply by scott brion on August 19, 2013 at 3:28am

Sorry - I missed this earlier 

Delmar has 36 wells (all SWEPI) producing that average 618,000 MCF production on 386 days of production.   

Permalink Reply by paleface on August 17, 2013 at 10:59am

 The second largest oil company in the world drops what they were doing to come back to Tioga county to drill TBR/Utica wells has 100 acres of stacked high pipline to go down and your un happy,I have been smiling since they drilled the Gee well my cheeks hurt.

Permalink Reply by Jack Young on August 17, 2013 at 11:53am

Shell is clearly the high cost producer in northern Pennsylvania, You'd be amazed how much more they spend on certain things than any of their competitors. My impression is that their East purchase and Tioga County in general have been big disappointments to them. I heard that had East stayed independent, they would have gone under had they followed Shell's drilling plan. That all being said, they do have some top quality engineers, and if anyone can find a way out of the losses they've suffered in the area, it's them. Cutting back on lease costs and royalties is a start, but the other areas where they need to economize will require modifications to their corporate culture, and that's unlikely to happen easily. We had a big joint venture with Shell (big for us, not them) that we finally unwound last year. It did give me a good insight into the Shell way, however, and that was the polar opposite of the way East used to operate. It will be hard to keep them happy in Tioga County, I'm afraid, unless they find something really big that covers a large part of the county.

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