The Economics of the Longer Laterals

I have been hearing for some time that the economics of this play are going to usher in different scenarios then one may be accustomed to seeing. Because of the expences incurred from site prep and of course the shortage of equipment capable of drilling the horizontals, the longer lateral with multistage frac (12 & up) is the apparent future of shale play drilling in this part of the world.I understand its savings from an O&G perspective, but what about from a mineral owners perspective ? For example...............Permit info in care of Earlene. Thank you love.

The Peironnet 001 well, serial # 239339, API # 17017346980000. Caspiana Field , Permitted in Caddo Parish to CHPK actually covers S/29 of Caddo & ends up in S/20 of Bossier. The longest lateral to date that has been seen by the Pro's on this side of the fence. A true vertical depth of 11,876' and a measured depth of 20,000'.

Even tho Jay left me the keys to the Geo Department, I'm not a brainiac. This is going to floor my hottie wife but the facts are the facts. I am however capable of doing some 'rithmatic. If you subtract the 11,876' true vert from the 20,000' measured, that leaves a lateral of 8,124', or roughly a mile and a 1/2.

How exactly are they going to divy up the monies on this deal ? It appears to be 2 different units. Instead of 640 acres (roughly) to be divided amongst, it now appears that you will be sharing your royalty with another 640 acres. Am I looking at this right ? How will the taxes be split up ? 33% of the lateral in 1 parish and 66% in the other ? And I been hearing about paperwork headaches ? HA!

Maybe some were premature in their thoughts on wells being drilled in the middle of a section. Because thats exactly what is going to have to take place for this to happen.
I know this hasnt come to fruition yet as the well has just been permitted but I would certainly enjoy anyones insight on this matter.

P.S. Cannon has been rolled into powder room for short term dry storage. :-)

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Permalink Reply by Buddy on January 19, 2009 at 6:11
SB: FYI, there is common ownership in both of these sections. This is down Highway 1 south just north of the Lock and Dam on Red River. The oxbow lake is where the boat launch is located.
Permalink Reply by Spring Branch,mineral owner on January 19, 2009 at 6:20
Thanks, Buddy. I guessed that to be the case. Seems they won't have to use a barge rig after all. I have minerals due south of S 29 in S 32 & 33, but am honestly not too familiar with the area as I haven't owned the minerals too long, and don't own the surface.
Permalink Reply by Snake Stewart on January 19, 2009 at 7:43
I think he was referring to me KB.
Permalink Reply by Snake Stewart on January 19, 2009 at 7:49
Fallout from a previous engagment I believe.
Permalink Reply by Les Bamburg on January 19, 2009 at 7:49
KB, I believe the maximum area that could be drained by a 4620' lateral is ~ 120-130 acres. This means a minimum of 5 wells per section should be drilled.
Permalink Reply by Les Bamburg on January 20, 2009 at 4:28
KB, the 8 wells per section was likely based on "normal" size frac jobs and 80 acre spacing. Petrohawk is pushing up the size of frac jobs and recently stated they were getting 500' frac lengths. So the math is 2 * 500' * 5280' = 5.28 MM sq ft or 121 acres.
Permalink Reply by Snake Stewart on January 19, 2009 at 2:42
Havent seen the Peironnet 29. This was for the 001 I believe.
Permalink Reply by sesport on January 19, 2009 at 4:39
Thanks, as we all can't be experts in all fields, it's going to "take the whole village" and a lot of 001, maybe even remedial 001, to help everyone out here.
Permalink Reply by Les Bamburg on January 19, 2009 at 5:14
SS, there is the possibility the "lateral" may only be in Section 20. There have been other wells with a difference between MD & TVD over 5280' but not of this well's length. Part of the difference is related to the deviation from the surface location to the start of the lateral. Generally the permit specifies any perforations can only occur within the target unit. I will know more once I see the well permit. I have attached a different well permit with a difference of 6900' as an example.
Attachments:
Permalink Reply by sesport on January 19, 2009 at 5:20
Thanks Les - on that permit, next to the line identifying the location, I see "codes" for SL, FSL, FEL, etc. What do these indicate?
Permalink Reply by Les Bamburg on January 19, 2009 at 5:45
SP, FSL - from south line, FEL - from east line, etc. SL is surface location. PBHL should be planned bottomhole location.
Permalink Reply by Spring Branch,mineral owner on January 19, 2009 at 5:29
I agree. One other thing, Les. I have watched many of these permits, as have you and it seems that in a large percentage of the wells, the ultimate actual MD of the well is not even close to being the permitted MD. Usually the actual MD is way short of the permitted MD. The reason has to be "an abundance of caution".

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