Replies to This Discussion

Permalink Reply by David Crockett on January 31, 2018 at 8:27

No. I deducted nothing. Nor the price of the well. Just thinking out loud and enjoying the fact that they can actually get the stuff out of the ground. So payout is probably not the correct word. 

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on January 31, 2018 at 8:35

The leases, the road, right-of-way, pad and pipeline connections are all "sunk" costs and are not included when analyzing a well Return On Investment (ROI).  I think it would be conservative to include a Net Royalty Interest (NRI) of 80%, the other 20% going to the mineral owners in the unit as their royalty payment.  I won't guess on lease Operating Expenses (LOE).  I think Jay might provide us with a best guess deduction for that.  The well qualifies for the Horizontal Well Severance Tax Exemption so no tax would be due until the well pays out or two years from first production.  Of course the big missing number is, what did the well cost?

• ▶ Reply

Permalink Reply by David Crockett on January 31, 2018 at 10:48

Is well cost about the same as the Austin chalk wells in Texas?

• ▶ Reply

Permalink Reply by john goodday on January 31, 2018 at 12:55

So what's all the hype about ?  

Are there 10 Austin Chalk wells (on the LA side) that paid for themselves?  

How about TMS - can you name 5 that paid their way?

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on January 31, 2018 at 13:07

IMO, the hype is that the potential evolution of the play.  Early wells are costly.  As operators climb the learning curve, costs come down and production increases incrementally.  Hopefully the AC becomes an economic success at oil prices that are in the sustainable range.  The TMS was not a success because it never reached that point.

• ▶ Reply

Permalink Reply by Craig Wascom on January 31, 2018 at 16:26

John I had these very same arguments with those that said the very same things about the Cline Shale ( Lower Wolfcamp) and you can read how it all played out on The Mineral Rights Forum ( sorry Keith not trying to promote another forum). The bottom line is so many went on for months about how none of these wells were paying for themselves. In case you don't know how that one ended it is the largest oil discovery in the US and the economics straightened out due to scale and greater cost efficiencies. If this is as big as some are saying,  holding acareage by production will be more important than positive cash flow at this point.

• ▶ Reply

Permalink Reply by Hydrocarbonite on February 9, 2018 at 5:09

So what’s happening with this Eagle Ranch this week?  

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on February 9, 2018 at 5:13

http://sonlite.dnr.state.la.us/sundown/cart_prod/cart_con_wellinfo2...

Permalink Reply by Steve on February 11, 2018 at 14:34

What are the latest production numbers on this well?

• ▶ Reply

Permalink Reply by David Crockett on February 11, 2018 at 14:37

click on Skip's link above  

• ▶ Reply

Permalink Reply by John Matherne on February 11, 2018 at 16:05

Then all that mass leasing is just another gold rush. 

• ▶ Reply

Permalink Reply by Keith on February 12, 2018 at 3:36

You would think that EOG wouldn't be foolish enough to play the gold rush game after what the industries been through. They are too big to need to fool investors with initial 24 hour production rates for a stock bump, so maybe they know something that we don't see. If EOG wasn't involved and this wasn't just after a major downturn in the energy markets I'd think differently, but I feel like we'll have to let this play out.

• ▶ Reply

• ‹ Previous
• 1
• …
• 9
• 10
• 11
• 12
• 13
• …
• 28
• Next ›
• Page