Replies to This Discussion

Permalink Reply by sesport on August 2, 2008 at 15:42

Would/could you please cite source of spreadsheet? Thanks

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Permalink Reply by David Smith on August 2, 2008 at 21:58

I prepared it.

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Permalink Reply by Don Howard on August 2, 2008 at 22:50

David: The report does NOT say per ACRE, it says per square mile =640 acres should
have 52 billion ESTIMATED RECOVERABLE RESERVES (PROBABLE RESERVES)

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Permalink Reply by David Smith on August 2, 2008 at 23:01

You are so right. But the error was only in my post, not spreadsheet.

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Permalink Reply by Friend on August 3, 2008 at 2:20

my guess is they will not be @ full production (8 wells / unit) by 2012... pipeline infrastucture needed, other factors. I do not know what well depletion rates will be...
nice job on the table and it is valuable (given your assumptions). There are so many variables... the depletion rate will not be straight line given refrac jobs... and there is a large variation between wells and unit production... i.e. the info CHK gave were projected averages. best wishes.

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Permalink Reply by SharonB T18N R15W S8 on August 3, 2008 at 8:56

I'm glad to hear you comment on refrac jobs and depletion rates. I was wondering about that. How often can a producing well be refracced - is the availability of frac trucks an issue?

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Permalink Reply by Johnson on August 3, 2008 at 10:47

76K on 25% royalty per acre for the life of the HS is much lower than some of the estimates I've seen on this board.

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Permalink Reply by SoBoRes on August 3, 2008 at 11:01

I would agree Johnson, I just put some conservative numbers into a Royalty Calculator and this is what it came up with, mind you this is based on production numbers from the Elm Grove wellhead and only takes in the consideration of a single well.

You have specified 1 acres included in the pool containing 640 acres

The calculations below are based on a royalty offer of 25% and a price of $8.94 per Mcf on a wellhead producing 16.8 MMcf per day.

Total Daily Wellhead Value: $150,192.00
Your Share of the pool is 0.00156
Daily Income From This Well: $58.67
Weekly Income From This Well: $410.68
Monthly Income From This Well: $1,724.86
1st Year Income From This Well: $21,355.43 (on one acre)

Remember, these numbers do not reflect production decreasing throughout time.

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Permalink Reply by David Smith on August 3, 2008 at 11:15

Yes, and Chesapeake says 73% in first year. But to get 52 Billion cf for the section at 15-17mcf daily in the first year, it's going to have to plateau at a level just below that 73% for a long time.

Here's revised Excel file.

Attachments:

• GasLeases2.xls, 33 KB

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Permalink Reply by ez on August 3, 2008 at 11:19

i cant see them drpping off 73% in a year and if they do i would be doing some investigating .

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Permalink Reply by David Smith on August 3, 2008 at 11:21

They said in the July 2 press conference, 73% falloff is the figure they are using in their internal planning. For Barnett, it's 70%.

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Permalink Reply by Snake Stewart on August 3, 2008 at 11:39

I still don't believe the falloff will be as great as they say due to the fact that we don't have enough intel and these wells are choked at a tremendous level compaired to Barnetts unchoked. The #1 gasfield in the U.S. isn't going to fizzle quite as quickly as they are saying. If so that would mean that they finally weren't lieing about something and that in itself is just too much for me to bare!

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