Comment

Comment by john doe on January 21, 2013 at 1:15pm

Check Google map they  have this well site shown,its a really impressive image..anyone know if this was before or after drilling?

Comment by Jim Litwinowicz on January 21, 2013 at 12:10pm

Sam; scroll down to 20 hrs from this post to see that RJS posted the plat from the Lippert well.  It shows a lateral of 5440.13' and a radius of 330'   Most all horizontals are now over 5000' 

Comment by Bob Jenness on January 21, 2013 at 10:58am

I find it interesting that the consensus of this discussion lately states with some authority that a  "nominal" horizontal well drains somewhat less than a hundred acres.  And we know that a lessee might have a well-crafted plan for one whole well when they come to offer a lease, yet they want to lease enough land for a dozen wells.  So I guess they're 92% speculators and 8% drillers.  I understand the economies of scale in putting multiple wells on a pad, but I'd really like to share in the future upside that seems to be perceived as my potential energy partner's entitlement. Perhaps this is just one more reason why a "lease" should be titled a "sale" at the top.  The mechanism by which royalties allow me to share future upside is diluted a lot when we push the future so far out.  At least can we get a clause that leases certain only for planned wells, then some way to receive future added bonuses when new wells are planned.  Seems only right when the market price of the planned production has fluctuated 6:1 in recent years, and may do so again.

Comment by sldouglass on January 21, 2013 at 10:43am

Gary Smith asked about the possible impact of ownership in the area by two companies like Range and Cabot.  I guess I would not spend too much time thinking about it because there is little a landowner can do after the lease is granted.  And I would have a hard time saying one company might be better or worse for this or that.  The each are among the big boys that do this kind of thing and they will work out an arrangement that makes sense to them which should not change your lease.

Jack Young discussed the question of separating the components of what come out of the drill hole.  On conventional old wells, certainly they had no trouble separating oil and "gas" at the well head and taking them to market separately.  And that may still be true of the oil for these so called "unconventional" shale wells.  However, for the wet gases, it is my understanding that they send them off to be chilled and different parts like propane, butane and ethane are separated at the chilling site and separately marketed at different prices.

Comment by sldouglass on January 21, 2013 at 9:59am

If I am mistaken about the length of Range wells, it is quite a turn-around since the 3rd quarter of 2012.  Find slide 17 at the end of the site below which indicates average length of less than 3000 feet for Range's wells.

http://marcellusdrilling.com/2012/10/range-resources-3q12-24-new-we...

Can you tell us where the 1280 acre site is located that is fully developed with 8 wells?  Note that my understanding is that horizontal wells are 500 feet apart [more than 350 feet] suggesting that they only drain efficiently for about 250 feet from the well bore.  Of course there could be improvements in fracking methods that would draw from further distances or the geology might allow further separation in some areas.  [in what counties might the geology be different?]  Do you know where and how many wells are drilled more than 500 feet apart?  Is there a realistic drilling plan certified by a petroleum engineer that shows a proposed development that would drain 1280 acres with 8 wells - possibly with oner or two wells drilled to demonstrate the production?

The 640 and 1280 acres have nothing to do with geology and engineering.  It just happens to be an arbitrary one or two square miles that have nothing to do with anything.

Comment by Jim Litwinowicz on January 21, 2013 at 9:23am

Sam; 3500' is short.  Their last well was over 5000' Most horizontals are now 5000-7000 ft. Most horizontals seem to be about 350 apart but that varies with the shale and operator. Thats why they now want units of 1280 acres instead of the old units of 640.

I doubt any unit has all possible wells drilled, maybe out east where they have been much more active for several years. They will be drilling for decades, probably a full century and longer They will drill a couple or three now, come back much later to drill more when the market is ready.

Comment by gary smith on January 21, 2013 at 8:49am

could be the range people are trying to make up for having to give cabot 50% of their take in the utica, on the backs of everybody else. or maybe cabot is leasing in partnership with them and they are just lowballing till they can't anymore.

Comment by rex roae on January 21, 2013 at 6:59am

For people looking to sign with Range, that 15% royalty net isn't really 15%.  In their lease agreement, they can deduct post production costs.  I see the deductions on our royalty payments with our old wells.  If I remember correctly, I think Range is capped at $0.80 per thousand ft(or whatever the unti is).  I've inquired with the Range landman on our un-leased land about having a set royalty with no deductions and they don't seem willing to budge at this time.

I did drive by the Lippert well on Sunday night with my wife.   Looks like the flame is around 15 ft high above the pipe.  Could see it from a couple miles away.  Looking forward to hearing some numbers shortly.

Comment by Jack Young on January 21, 2013 at 6:39am

Oil is already seperate from the gas at the wellhead, so there's no issue selling that upon production. But to produce the oil you need to produce the gas, and until a pipeline is in place that's impossible unless you want to waste the gas. 

Comment by gary smith on January 21, 2013 at 6:36am

sam,  seeing how cabot holds 50% of ranges utica holdings in crawford co, what is your guess about how things go when two companies are involved together like that. also your idea about the affect of that partnership on the non leased area of crawford. a guess of how things may pan out.

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