Comment

Comment by Bob Jenness on June 3, 2013 at 10:16pm

Sam (and everybody),

If I do a little math on your numbers ($16 Million from 50 acres), then I could estimate the asset value of O&G per acre as $320K.  Could we use that to compute the Return on Asset provided by a potential new lease?  If that's not the right math, what would you suggest?  Would you or anybody like to do that math for a sample real producing horizontal lease?  Would anybody care to compare that to, for example, an annuity or savings account?

I would caution here that the per-well average has been estimated to vary from 2 to 10 BCF, and I think I've seen numbers that might go as high as 160 acres drained by a mile-long horizontal leg.  On the other side, if we're estimating total value, then we want to consider all 3 possible producing layers in Crawford County. So we could put a range of half to 20x around your numbers. Lest we ever assume this might be simple...

Comment by Don Graham on June 3, 2013 at 6:21pm

we were told that a well had been permitted and pad poured on or near Maples RD, Linesville____anyone have any info on that?

Comment by sldouglass on May 31, 2013 at 10:11am

For what it is worth, one horizontal dry gas well has been said to average about 4 billion cubic feet [or 4 million mcf] over its life - HALF OF THIS IN THE FIRST COUPLE OF YEARS. One well only produces from a fairly modest area of say 500 feet times a length of maybe 4000 feet or say, 2,000,000 sq ft - divided by 43560 = something less than 50 acres. Multiply the 2,000,000 mcf production of the first 2 or 3 years times a conservative price of say $4/mcf gives you $16,000,000 - then apply whatever royalty you have in place to find out how much you get in the early years.
Of course wet gas is worth more and should generate significantly more revenue [same for oil]. Numbers used here are believed to be conservative fut there are many variables. Every well is a little different.
AND - just because the well is on your property does not mean you get all the royalty. The royalty will be shared [probably on an acreage basis] with everyone in the unit of _____ acres. And the practice in a lot of areas is to drill one or two wells to hold the leases in the unit by production and then move on to a different unit.

Comment by Samuel J. Orr on May 28, 2013 at 5:24am

RoughRice: Thank you. I was referring to Staab well. I believe Halcon rests all of their wells for 60 days. If you know when fracking is finished on a well, you will like get some test results reported from well a very few days after that 60 day rest period. I assume you probably knew this but am posting it in case someone has other information. The post represents my understanding but I may be in error! 

Comment by Berk on May 28, 2013 at 5:18am

http://pipeline.post-gazette.com/news/archives/25174-allegheny-coll...

Comment by RoughRice on May 28, 2013 at 4:39am

Samuel - Falcon's Staab 1-H well was spud on 12/1/12 and as Jesse D. noted was fracked earlier this month.  The other active well in Crawford that I am aware of is SWEPI's Byler 2083 4H well which was spud on 12/9/12.  In case you, or others are interested, the approximate location of Staab well is 4800-4880 Bentley Rd., Linesville, PA.  I am very much looking forward to getting results of Staab well as this was one of the wells Falcon featured in its graphic showing seismic comparisons of other wells from south [Harrison County, OH] to north [Venango County, PA]  Of course, they didn't reveal the actual seismic for Staab (as it was confidential), but there were enough hints in the graphic to be very encouraging on what they expect to find.

Comment by Samuel J. Orr on May 28, 2013 at 3:02am

Things can change quickly. In Venango county the results of the Allam well suggest there may possibly be some renewed interest in Venango. I believe the same thing could happen in Crawford County where Halcon I believe is currently drilling at least one well?

Comment by Samuel J. Orr on May 27, 2013 at 2:56pm

Bob: one boe of natural gas equals 5400 cubic feet or 5.4 mcf. If natural gas is $4.00/ mcf, then 1 boe (barrel of oil equivalent) is worth only $22.00 vs  perhaps $93.00 for a real barrel of oil. Where natural gas can be used as a substitute for oil, natural gas is much much cheaper. You are correct when you said boe is based on BTUs. Regards, Sam

Comment by Bob Jenness on May 27, 2013 at 2:01pm

John Doe,

I got bigger numbers than that, but I couldn't find a set of numbers and math that would pass any simple consistency check.  I thought I should just be able to multiply BOe/d by the spot oil price to get a total daily production number, but perhaps BOe/d is based on BTU equivalency, not $ equivalency.  Using gas and condensates separately produces a smaller number, but still bigger than yours.  I did check at least one source that says condensate prices should be similar to oil, but I can't find a source for condensate spot market prices.  At equal price, I get something closer to your $700K per month.  That sounds too good to be true, so I know I'm missing something.  Anybody?

While we're on this subject, I also tried to find EUR estimate methodology for Utica wells based on initial production numbers, and couldn't convince myself I had that math right.  Is there a petro engineer in the house that can help us on this?

Comment by john doe on May 27, 2013 at 3:57am

http://investors.halconresources.com/releasedetail.cfm?ReleaseID=76...

Is my math off or using these numbers provided add up to approximately 700 K monthly production..

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