Oil & Gas Pro

Typical Well Cost Breakdown - Haynesville Shale (5/24/10)

Petrohawk provided the attached example well AFE as part of today's presentation. This AFE is typical for Haynesville Shale wells and gives a good breakdown of the cost categories.

Here are a few key pieces of information from the breakdown:

- The total well cost is $9.4 million with a drilling cost of $4.1 million (43% of total) and completion cost of $5.3 million (57% of total)
- Drilling rig rate is $22,600/day with a total cost of $904k or only 10% of the total cost
- Fracture stimulation cost of $2.8 million (30% of total)
- Well location preparation and roads cost $380k (3-4 acres)
- Only 14% of the well cost is for tangible equipment

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landownerPermalink Reply by king john on May 25, 2010 at 3:03
thanks for segmenting this piece of information from the presentation. i think this would be good for the UMI as a basic (ball park) figure. i am sure it varies well to well, as no two are the same.
kj

landownerPermalink Reply by Henry on May 25, 2010 at 7:36
Can we look at this from the perspective of the UMO? The mineral code allows the driller to deduct costs for "drilling, testing, completing, equipping, and operating the unit well, including a charge for supervision."

I'll ask the more knowledgeable if some of these charges will not fall into the categories outlined in the mineral code. For example, would "Land/Legal/Damages," "Insurance," or "Location/Roads/Pits" not be chargable to the UMO? Anyone want to weigh in?

Oil & Gas ProPermalink Reply by Les Bamburg on May 25, 2010 at 7:43
Henry, the mineral code is sufficiently broad in its description that all the categories listed on the AFE would likely be chargeable. Of course recognize the AFE is a pre-project estimate and the actual costs incurred would be used for calculating the deductions.

Oil & Gas ProPermalink Reply by The_Baron on May 25, 2010 at 9:59
I would agree with Les,

Also, the UMO would want to take into account that after the costs seen on the AFE, there will be monthy expenses. Also, should any problems occur, even years down the road (equipment breakdowns, etc.) the UMO will bear its proportional cost of that as well.
Permalink Reply by Ginger landry on September 13, 2014 at 3:45

Les, thank you for your post.  I found it very interesting as I have  been trying to find that exact information in my spare time for several weeks. Do you happen to remember the name of the person at Petrohawk who made the presentation about the breakdown?  I know it was 4 years ago and Petrohawk was bought out by BP since then but I need someone exactly like that to do a cost analysis for my husband and I. 


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on September 13, 2014 at 3:56

Ginger, Les doesn't log on much these days as he has been swamped with work.  As you can see, this is a four year old discussion thread.  Any information relevant to well cost in 2010 would not be worth much in 2014.  However if you are interested in finding out the cost of a specific well that has been completed for some time that cost is probably listed in the state O&G database.  In order for operating companies to get their severance tax break they are required to submit a form which states the cost of the specific well.

If you know the well serial number or the well name and location by section-township-range, post it and I'll look up the well cost for you.


landownerPermalink Reply by S Helen on March 1, 2015 at 14:55

Skip - how do you look up the form the companies are required to submit to get the tax break?  I can't figure out what title the documents would be listed under on Sonris.


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on March 1, 2015 at 14:58

The Horizontal Well Incentive form is in the well file in the Document Access portion of the database.  If you can't find it, post the well serial number and I'll post a link.


landownerPermalink Reply by S Helen on March 1, 2015 at 16:10

Serial #244659 in Sec 22, 9N, 13W.


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on March 2, 2015 at 2:19

Either XTO has not filed for the tax exemption or the SONRIS staff has not processed the application.  Remind me in a couple of months and I'll check again.


landownerPermalink Reply by S Helen on March 2, 2015 at 4:07

Thank you for your time and efforts.  I did not see a designation of "Horizontal Well Incentive" in the Document Access and tried everything I thought might pertain, always getting "No Document found".  Is there another title for that severance tax break form? Thanks again.


Oil & Gas ProPermalink Reply by Skip Peel - Mineral Consultant on March 2, 2015 at 4:14

No other name. It simply has not been entered in the database at this time.

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