Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on October 11, 2014 at 9:58

At this point in the play well cost varies widely based upon whether an operator requires a Pilot Hole.  One of the key questions for a horizontal well is the target depth to "land" the lateral.  In areas where there are prior wells which have provided the information to define formation depth, the driller can simply drill vertically to the "kick off" point and then "build the curve" (the radius transition from vertical to horizontal) to the target depth.  In areas where that information (it's call, well control) is not available the driller will drill vertically through the entire thickness of the target formation.  Often electric logs are run and a core sample is taken.  Once the target depth is established, the driller will "plug back" (move back up the vertical wellbore to a point above the target formation) and cement a plug to isolate the lower wellbore.  Then, knowing the "landing depth" the driller will change the drill bit out for a "mud motor" which is steerable and can turn the radius.  At this point the driller is no longer "drilling" and is now "sliding".  In drilling, the drill string is rotating turning the bit in the hole.  In sliding the drill stem does not turn and the bit on the mud motor is powered by the drilling mud being circulated through the drill stem. 

Obviously the extra days and operations can run up the well cost significantly.  For that reason "exploration" wells are considerably more expense than "development" wells which require no Pilot Hole.  The investment in the TMS by all the operators is such that they may drill at a loss to HBP their leasehold.  HBP is a standard term which is literally Held By Production and means that a producing well has been completed which will hold the underlying leases in force without further development.  Crude prices under $90 are not good for the economics of the play especially at this early stage.  I don't know the point at which Goodrich or any other TMS operator would stop drilling.  Let's hope it doesn't come to that.  This is a Tangi TMS Unit map from Tuscaloosa Trend.

Permalink Reply by William Brister on October 11, 2014 at 12:43

Thanks Skip that is all very informative!

Permalink Reply by William Brister on October 11, 2014 at 12:44

We are hoping the Verberne and Williams wells produce very well!

Permalink Reply by Skip Peel - Mineral Consultant on October 11, 2014 at 12:48

You're welcome, William. They are being drilled in some good rock.

Permalink Reply by Two Dogs, Pirate on October 11, 2014 at 10:11

The TMS is the most costly formation to produce. If oil falls below $80 for very long GDP is going to be in trouble. One school of thought thinks that OPEC is fixing to fall apart and if that happens we could see a flood of oil into the market. Saudi and Iran have been cutting the price and upping production in a fight to see who gets to sell to the Asian market. Low energy costs could ramp up economies around the world.

Permalink Reply by rookie on October 11, 2014 at 10:35

Just read info about GDP hedges, they have 3800 bbls per day hedged almost in the mid 90's for 2014 and 3500 bbls per day hedged in the mid 90's for all of 2015.  Hopefully during the next quarterly update we will find that GDP hedged even more, but if not, one would believe the existing hedges will give them "some" breathing room.  The 400 million dollar question in my mind, is there a JV partner with a good balance sheet that want to lock up a large "finite" resource.  Notice the word finite, the amount of oil is not infinite, these short term market moves will happen, how long is short term, guess we will find out, is this a "short" short term or a "long" short term......In the meantime, GDP's equity price has been severely punished, more than it should be in my opinion......Need a few more really good wells, maybe an expanded hedging schedule and we shall see.

Permalink Reply by Skip Peel - Mineral Consultant on October 18, 2014 at 2:59

Ensign Drilling SW #753 reported 37 days Drilling Ahead @ 11,392', 10/17.  The rig reports a depth more shallow than last week.  This may indicate that the rig drilled a Pilot Hole and has now Plugged Back to kick off the lateral.

Permalink Reply by Skip Peel - Mineral Consultant on October 25, 2014 at 3:18

Ensign Drilling SW #753 reported 44 days Drilling Ahead @ 13,748', 10/24. 

Permalink Reply by Skip Peel - Mineral Consultant on November 1, 2014 at 3:44

Ensign Drilling SW #753 reported 51 days Drilling Ahead @ 18,650', 10/31.

Permalink Reply by Kevin Raybourn on November 11, 2014 at 13:27

Have they Moved back to Amite Co yet ?? Last Tuesday I saw it still standing at the Williams .....

Permalink Reply by Skip Peel - Mineral Consultant on November 11, 2014 at 13:46

The Ensign rig 753 has moved to the T Lewis 38H.  It reported Moving On last Friday.  It probably spud over the weekend or Monday.

Permalink Reply by Skip Peel - Mineral Consultant on December 10, 2014 at 3:04

The Williams 46H-1 (68.2% WI) well, which was drilled with an approximate lateral length of 6,400 feet and was fracked with 20 stages, is in early flowback and is currently producing approximately 1,000 Boe per day, but has not achieved peak rate. An update on this well will be provided at a later date.

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