BP Set To Announce Plans

According to the Tribune Chronicle (Warren, OH) BP "...plans to make an announcement this morning about it's future with the Utica Shale Play "

Let's keep our fingers crossed for good news!

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Permalink Reply by Mark McGrail on April 29, 2014 at 1:49am

US,

Hopefully, another company sees a rose here and develops Trumbull County

Permalink Reply by Bill Barnaby on April 29, 2014 at 2:03am

I concur, good luck to all those in trumbull county!

Permalink Reply by Mark McGrail on April 29, 2014 at 2:55am

US,

Sounds like a weekends worth of work.

Seriously, in the tribune article quoted someone "...that early results are difficult to monitor." I took this to mean that perhaps more wells need to be drilled and completed in order to get a better evaluation. Of course that could also be wishful thinking.

Permalink Reply by Mark McGrail on April 29, 2014 at 7:25am

US,

Will the write down allow them to sell the  acreage at a loss ?

Permalink Reply by Bluflame on April 29, 2014 at 7:56am

Mark,

   Value of the acreage will be reduced to $0 on BP's balance sheet. Tax benefits vs profitability will ensue. They can give it to charity, if they like, with no further economic ramifications (please excuse my cynicism) However, any sale after the writedown would be captured as revenue on the P&L and taxed.

  In BP's world, the write-down will barely register on their seismic scale. I'm not an accountant.....please reference my brief  50-page disclaimer written in microscopic print, conveniently available on my website.

 

BluFlame

Permalink Reply by Mark McGrail on May 1, 2014 at 6:15am

US,

I don't believe BP invested in this acreage just to flip it, it's just the way it turned out.

I suppose one of the issues for a company interested in purchasing the leases would be renewal.

Could a buyer drill enough of the acreage before leases lapse in order to hold them HBP ? Or would the new company be faced with the prospect of paying the initial sale price asked by BP plus the cost to renew expiring leases ?

Permalink Reply by Mark McGrail on May 1, 2014 at 6:34am

US,

I suppose a company could approach this differently than BP. Instead of concentrating in one are it could spread out it's initial wells. Then from there decide how to proceed in drilling in order to HBP.

Permalink Reply by Nelson E. Yost on May 1, 2014 at 1:54am

Many, many Clinton wells in North West Trumbull County.....the Clinton is above the Utica and has produced good oil and gas.....so why would organic matter far deeper and under greater pressure be immature?

Permalink Reply by MJ on May 1, 2014 at 2:15am

Very good question!  I would also like to know the answer to that.

Permalink Reply by Joseph-Ohio on May 1, 2014 at 2:49am

U. S. :

Isn't that where fracturing comes into the picture ?

Permalink Reply by MJ on May 1, 2014 at 3:23am

Thanks US

Permalink Reply by Steven A Joliat on May 1, 2014 at 3:35am

It isn't necessarily that the deeper organic matter is thermally immature.  The oil and gas in the Clinton is generally believed to have migrated out of the Ordovician rocks and into the Clinton sandstones during the maturation process.  Utica Shales's analogy of the brick is useful by demonstrating that the oil and gas remaining in the Utica Shale formation is trapped by the low permeability of the rock itself.  Current reservoir pressure conditions and the permeability of the rocks allow for the very slow movement of the gases and liquids through the rock over geologic time intervals.  The higher permeability of the Clinton sands allow for the efficient capture of gas and oil by simple vertical wells.  Economic production from the Utica requires the use of horizontal wells and hydraulic fracturing of the shale to allow for sufficiently rapid movement of gas and oil from the shale into the wellbore.

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