About how much does it cost SWEPI to drill a horizontal HS well?

About what is the total estimated reserves recoverable from one of these wells?

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Ken:

Inflation would generally increase the costs of everything, including the drilling and operations costs of a well. If the ng spot price goes to $5 merely as a result of inflation, everyone is just in the same boat as they are now at $4.
Good point but not sure the tide would raise all boats. the gas may go to 5 by virtue of demand but your purchasing power with the increase may be greatly diminished. 4 now may be as good as 5 in 2012 if inflation takes off.
Henry:

UMO (I use UMI = Unleased Mineral Interest) is only attractive to those who are in units in which the non-carried WI is high enough to warrant drilling a well. UMI is carried WI which is not subject to penalty. They do not contribute to the direct cost of drilling and equipping the well; as such they represent a "drag" to the operator. Unlike the non-consent WI, the operator cannot collect a risk charge againast UMI in LA. The operator can, however, charge reasonably for operating costs of the well. As such, I wouldn't count on hitting payout at 2.25 BCF - I would estimate anywhere between 2.5 - 2.6 BCF to payout at $4/mcf. Your assumptions appear to include a 'typical' well, with no drilling or completion problems. Also, your math assumes an analysis of a unit with 100% leased vs. 100% unleased. Obviously, a unit that is completely unleased will not drilled under any circumstances, except on company fee lands.

After the initial phase of 'drilling out' to establish as much HBP acreage out of the leasehold as possible, the NRI held by the operator and other WI partners of each unit, as well as the moderate term ng price forecasts, will increase in importance relative to current and prior activity. That transition will begin to occur next year and through approximately early 2013. After that point, being in an undeveloped unit that is not 75% - 80% leased at a minimum will significantly decrease one's chances of having a well drilled.
Henry, you failed to take into account ongoing operating expenses which, believe me, will be considerable and in addition to the cost to drill.
Dion and SB,
Your points are well taken and spot on. I'm not recommending UMO/UMI to anyone. It's a risk/reward thing. Most people (myself included) would not want to bear the risk. But, when gas hits $5, being a UMO becomes an option. Below $5, I don't view it as an option.
Though I am strictly a leased royalty interest owner , I have several leases with an Operator that requires the Operator to send me copies of ALL reports including drilling, completion and workover reports. I can tell you that one well I was a royalty interest owner in wound up costing approximately $23 million and another well has already an AFE for $565,200 for some work in addition to the over $9 million it cost to drill and complete it. Add to those costs the normal Operating expenses and see how payout works at $4 gas! It is strictly a business man's risk to be a UMI.
SB,
I agree. A business mans risk, and preferably a rich business man.
Because you may not ever get a dime. But I agree, each person makes his/her own decision.

And for what its worth (not much), I have been told by some people that went UMI, (not in the HA), that when the company started to drill the first alternate unit well that they got a bill for their portion of drilling and expenses. The company considered them to be in the O&G business at that point. I saw the correspondence and the bills.

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