Brace #1H

STATE COLLEGE, Pa.,

Sept. 26, 2012

(GLOBE NEWSWIRE) --

Rex Energy Corporation

(Nasdaq:REXX) today announced initial production results from its first Ohio

Utica Shale well and provided an update on its operations.

The Brace #1H, located in Carroll County, Ohio,was brought online to sales

from its 60-day resting period at a 24-hour sales rate, assuming full ethane

recovery, of 1,094 Boe/d (43% NGLs, 31% gas, 26% condensate). The well went

on to average a 5-day sales rate, assuming full ethane recovery, of 1,008 Boe/d

(43% NGLs, 30% gas, 27% condensate). The well produced with an average casing

pressure of 1,502 psi during the initial 24-hour sales period and 1,533 psi

during the average 5-day sales period on a 24/64 inch choke. The well was

drilled to a total measured depth of 12,332 feet with a lateral length of

approximately 4,170 feet and was completed in 17 stages. Based on

composition analysis, the oil from the Brace #1H is 60.1 degree API gravity

and the gas is approximately 1,250 BTU.

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Replies to This Discussion

Permalink Reply by Robin Hood on September 26, 2012 at 9:53am

That is great information. What does a 24/64 in choke mean? Is that a 3/8" diameter"?  Is 60.1 degree API gravity the top shelf stuff? We need more information like this on other wells. Thanks

Permalink Reply by Jack Straw on September 26, 2012 at 10:40am

RE: "Based on composition analysis, the oil from the Brace #1H is 60.1 degree API gravity

and the gas is approximately 1,250 BTU."

They referred to the 60.1 degree API gravity material as Oil.

This is a gravity more associated with Condensate (Natural Gasoline) - not Oil.

 

RE: "assuming full ethane recovery, of 1,008 Boe/d (43% NGLs, 30% gas, 27% condensate).".

Boe/d is Barrels of Oil Equivalent/day.

I hate seeing the use of Boe/d, as this refers to a BTU equivalency.

NGLs are not equivalent to Oil (in monetary value or in equivalent usage).

It is like throwing in a bunch of soy protein and calling it Steak.

 

RE: "What does a 24/64 in choke mean? Is that a 3/8" diameter"?"

Yes, 3/8".

For historic reasons, they always refer to choke size in increments of 64ths of an inch.

A 24/64 in choke seems a reasonable size for production (to me).

Some operators tend to quote initial production using an (overly) large choke size in order to result in a larger production figure - essentially gaming the system.

REX seems quite honest in using a realistic choke size.

 

All IMHO,

                 JS

 

 

 

Permalink Reply by jonathan M. on September 26, 2012 at 11:03am
Jack, in response to question "is this the good stuff" wouldn't 40-45 degree (Louisiana light sweet crude) be considered the "good stuff"? It is my understanding the higher the degree than the lighter the crude, correct? How does this effect the value? Also, as far as production it seems to me that it would be easier to produce lighter oil rather than heavier oil?

Thanks
Permalink Reply by Jack Straw on September 26, 2012 at 12:39pm

RE: "wouldn't 40-45 degree (Louisiana light sweet crude) be considered the "good stuff"? It is my understanding the higher the degree than the lighter the crude, correct?"

Yes, 40-45 degree (Louisiana light sweet crude) be considered the "good stuff".

It yields the highest percentage of what is considered the best value product - gasoline.

And, being both light and sweet (low sulphur) is is easiest (cheapest) to refine.

RE: "It is my understanding the higher the degree than the lighter the crude, correct?""

True, to a point; once the API gets much over 50 degree, it is not really Oil any more - it is going into a condensate.
As the API gravity continue to increase you go into shorter chain hydrocarbons (with less energy density). 

Just as the value of an mcf of Natural Gas has dropped due to the current over supply.

The value of the NGLs have likewise dropped considerably.

The good news is that has allowed for the start of a resurgance of chemical industries that had earlier departed to foreign shores. As these new found NGL resources are exploited, jobs will follow. And, as domestic demand for NGLs increase, so too will prices.  

 

All IMHO,

                 JS

 

Permalink Reply by jonathan M. on September 26, 2012 at 1:01pm
Thanks jack. So is condensate considered ngls? I thought the btu content (in this case 1250) is what determined whether or not there was a liquid component to the nat gas?
Permalink Reply by Jack Straw on September 26, 2012 at 1:29pm

RE: "So is condensate considered ngls?"

No, I do not consider Condensate to be an NGL - and neither did REX, as the seperated it out in their figures.

Condensate is often referred to as "Natural Gasoline".

It occupies a position in the continuum between that of oil and that of NGLs.

In the old days, often a field hand would pour condensate directly from the tank at the well through some cheese cloth (to filter out any dirt) and then directly into the fuel tank of his Pickup truck. Depending upon the Octane, it might knock a bit - but he could not complain about the price.

 

RE: " I thought the btu content (in this case 1250) is what determined whether or not there was a liquid component to the nat gas?"

I am not sure how REX handled this; not sure as to what their exact definition of NG was w.r.t. NGL. Did they consider both Methane and Ethane to be NG? Or, did they lump Ethane in with NGLs?  I have no definitive answer for you.

All IMHO,

                JS

Permalink Reply by JR on September 26, 2012 at 11:05am
Is this a good result?
Permalink Reply by Jack Straw on September 26, 2012 at 1:11pm

RE: "assuming full ethane recovery, of 1,008 Boe/d (43% NGLs, 30% gas, 27% condensate).".

As earlier stated, I cringe when I see Boe/d.

To REX's credit they did break it down by percentages - allowing us to backtrack and determine what it truly means.

Condensate: 27 % x 1,008 Boe/d  x 1.07 Barrels Condensate/Boe = 290 Barrels/d of Condensate

NGLs: 43% x 1,008 Boe/d x 1.4 Barrels NGL/Boe = 606 Barrels/d of NGLs

NG: 30% x 1,008 Barrels x 6mcf/Boe = 1814 mcf/d

The value of Condensate, NGls and NG varies, by the minute.

I am going to give an approximate estimate of values today (my WAG):

290 Barrels/d of Condensate x $60/Barrel of Condensate = $17,400./day

606 Barrels/d of NGLs x $25/Barrels of NGL = $15,150./day
1814 mcf/d of NG x $2.50/mcf = $4535./day

Total = $37,085/day

I would be happy to recieve a 20% royalty ($7,417/day).

It is appropriate to realize that these figures represent the initial (flush) production.

The depletion curve will likely be steep; but if it were in MY back 40, I would certainly consider this a good well. Even after taxes, it would only take two weeks to pay for the new Porsche for me, and a new ironing board for the wife.

 

All IMHO,

                 JS

 

Permalink Reply by jonathan M. on September 26, 2012 at 1:20pm
Haha!
Permalink Reply by Bluflame on September 26, 2012 at 1:26pm

Jack, Jack, Jack,

  Shame on you. You could at least throw in a new iron and maybe a new sweeper for the wife!!!

BluFlame

Permalink Reply by TM on September 26, 2012 at 1:33pm

Looks like pretty good results for a 129 acre drilling unit for this well.

Permalink Reply by Bluflame on September 26, 2012 at 2:55pm

Jack, et. al.,

  Really, the results of the Rex Brace #1H well are pretty consistent with those of other Carroll County wells.

BluFlame

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