Chesapeake Announces Three Well Results (7/30/09)

Three notable wells completed by Chesapeake in the Haynesville during the 2009 second quarter are as follows:

The CLD 23 H-1 in Caddo Parish, LA commenced production on June 22, 2009 and achieved a peak rate of 29.1 mmcfe per day and a pipeline-constrained first 30-day average rate of 15.3 mmcfe per day.

The Frith 29 H-1 in De Soto Parish, LA commenced production on June 27, 2009 and achieved a pipeline-constrained peak rate of 23.7 mmcfe per day and a pipeline-constrained first 30-day average rate of 14.2 mmcfe per day.

The Chesapeake Royalty LLC 30 H-1 in De Soto Parish, LA commenced production on June 27, 2009 and achieved a pipeline-constrained peak rate of 22.6 mmcfe per day and a pipeline-constrained first 30-day average rate of 15.2 mmcfe per day.

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Permalink Reply by Skip Peel - Mineral Consultant on July 30, 2009 at 14:51
That's awfully high, Les. Is that a HS figure or applicable to all "shale gas"?
Permalink Reply by Les Bamburg on July 30, 2009 at 14:55
Skip, that is applicable to all shale gas and is based on information from numerous companies and analysts.
Permalink Reply by Skip Peel - Mineral Consultant on July 30, 2009 at 14:58
You know me, I find decline data of interest. Got a link for me?
Permalink Reply by Les Bamburg on July 30, 2009 at 15:03
Skip, it is just information I have compiled over the last year. If you go back and review old presentations by Chesapeake, Goodrich, XTO, Newfield, Southwestern, etc you should find some info. I also have access to various consultants and analysts reports that are not public.
Permalink Reply by Grillin' - MmmMmm on July 31, 2009 at 2:12
These quoted decline rates assume no surface/market restrictions. Don't forget, the 30-day IP's CHK quoted here were all "pipeline constrained". This will throw a monkey wrench in the decline curve calculations and theory. Much of the decline factor information is based on unrestricted rates.

What does all that mean? Well, if a well is pipeline restricted, it will probably exhibit a lower initial decline rate for a while. Just need to be careful using these numbers. Once we get more data (6 months or more) these calc's will be more meaningful.
Permalink Reply by Les Bamburg on July 30, 2009 at 14:58
Logan, attached is an old example of a shale gas decline curve.
Attachments:
Permalink Reply by Parkdota on July 30, 2009 at 15:56
Encana was going to put 4 wells at each corner of my section until prices and the enconomy tanked. They're only doing one now so....if I estimate the projected production on one well can I assume that when things get better in time that they'll go ahead with the other three wells thus allowing me to quadruple my estimates? If so, would the same decline rates apply? Basically, I thought you could only do one horzontal per section but I've read that you can do at least four. How many can be done?
Permalink Reply by Les Bamburg on July 30, 2009 at 16:08
Logan, many operators have assumed 80 acre spacing with 8 wells per section for a fully developed Haynesville Shale unit. Each well would perform with a similar decline curve but questions is timing for drilling of the additional wells in each section.
Permalink Reply by Bobi Carr ("parker") on July 30, 2009 at 16:11
Les,

Are they able to count the total EUR's expected for the 80 acre spacing using the results of one well or is there a different criteria that is used for counting reserves?
Permalink Reply by Les Bamburg on July 30, 2009 at 16:26
Parker, the estimated recoverable gas for a section is ~ 52 Bcf or eight times the 6.5 Bcf EUR per well.

By the way, there are stingent rules that govern the booking of recoverable gas as reserves. The rules change for unconventional gas effective 1/1/2010.
Permalink Reply by Bobi Carr ("parker") on July 30, 2009 at 16:33
Les,

That's cooking with gas.

Don't you think they will continue to increase over time?
Permalink Reply by Les Bamburg on July 30, 2009 at 16:47
Parker, it is possible given the 52 Bcf is based on a conservative recovery factor of ~ 30%. But we will have to see 2-3 years of production versus the type curve.

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