Replies to This Discussion

Permalink Reply by J W on May 18, 2009 at 12:54

jay have your heard what the shale is around cross lake. i hope its better than 5.5 mil. a day. east side south lakeshore and jolly napier.

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Permalink Reply by Jaybird on May 19, 2009 at 3:07

I agree that 5.5 MMCFD is a very respectable well. If that well produces for the next 20 years at about 1/3 of that production...I would be pleased. Anyone that would be disappointed in that well would change their mind once they walked to the mailbox for 20 years.

Jaybird

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Permalink Reply by Count of Monte Cristo on May 19, 2009 at 3:13

the problem is it most likely won't produce in the long run at 1/3rd of that production, heck there's an 85% decline rate in the first year alone!

Permalink Reply by Spring Branch,mineral owner on May 19, 2009 at 3:47

It is fine for the royalty owner with no investment. The WI owners who just spent $7.5 million drilling it might not think so with gas at $4. Just wonder how many more of them will get drilled if gas stays at $4 for a while? I'm guessing not many. The well's decline rate will probably have a lot to do with it.

Permalink Reply by Count of Monte Cristo on May 19, 2009 at 3:25

just ran some crude calculations.... assuming 85% 1st year decline, 25% in later years, 8% discount rate, $8 million in well costs, 25% royalties, etc. etc. Chesapeake would need NG prices above $7 to make this well break-even.

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Permalink Reply by Count of Monte Cristo on May 19, 2009 at 3:46

no, there are a lot of complicated real world variables i didn't put in there. Just wanted a rough estimator of what some generic operator would face with that type of production and decline curve. Obviously if a company had hedged above $7 per Mcf they'd be in good shape.

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Permalink Reply by Spring Branch,mineral owner on May 19, 2009 at 3:50

Jay, it seems to me they can better use PXP's promote $$$$ drilling wells in Bethany-Longstreet and elsewhere. I'm guessing that stuff in Northern Caddo abd Bossier will get developed when gas prices go up and stay there for a while.

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Permalink Reply by Count of Monte Cristo on May 19, 2009 at 4:06

agreed, like I said before I think this well will put a hold on drilling north of I-20 until prices improve significantly (above $7 or $8 per Mcf). There may be some unlucky souls who find out that some small time operator is going to come in and drill a vertical well just to hold their lease by production for the larger company.

Permalink Reply by Spring Branch,mineral owner on May 19, 2009 at 3:42

Electrodynamics, I am not confused. The Prescott Family well in Section 35 of 19/13, on a N/S plane is one mile north of the Exco Sharp well in Section 1 of 18/16 and two miles north of the Chesapeake Sharp well in Section 7 of 18/15. Its IP was comparable to the Chesapeake Sharp well and less than the Exco Sharp well.

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Permalink Reply by The_Baron on May 19, 2009 at 4:08

Yes, but I believe Electrodynamics was trying to say that the Exco and CHK Sharp wells are off to the west by 17 & 16 miles respetavly.

The hope was that as tthe shale went east, it would improve from what they have found north of shreveport, this does not seem to be the case.

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Permalink Reply by Spring Branch,mineral owner on May 19, 2009 at 7:46

Yes, but in this vacinity, north/south may be more critical than east/west as long as you don't go too far east or west. It looks like the Herold well in 17/16 Section 13 made a good well. Anyone hear anything about the XTO well in 17/12 Section 9?

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Permalink Reply by The_Baron on May 19, 2009 at 7:48

In any case this may be dashing the hopes of the mineral owners on the fringe in north bossier and webster parishes.

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