Anyone local to the Avoyelles area hearing anything about the Eagles Ranch Well? It appears that they recently finished drilling well and should be moving frac crews on location soon.

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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. 

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?

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

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?

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.

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.

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

What are the latest production numbers on this well?

click on Skip's link above  

Then all that mass leasing is just another gold rush. 

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.

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