Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on October 21, 2008 at 3:09

Spring Branch. In the recent CHK report, Aubrey McClendon stated that the early HS horizontal wells were produced on chokes for competitive reasons. The way I read that, CHK did not wish to report the true production while they were actively leasing. The Petrohawk 17 mmcfd well you refer to is also on a choke. 22/64" if I remember correctly. As operators need to generate investment dollars and secure lines of credit for production, I think we will begin to see more accurate flow rates. They need to prove the value of their leaseholds and will be less likely to hide their results.

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Permalink Reply by Les Bamburg on October 21, 2008 at 3:27

Spring Branch, some of those Chesapeake wells had short laterals and less frac stages. The first Petrohawk well had 11 frac stages and the 2nd well had 9 frac stages.

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Permalink Reply by Bobi Carr ("parker") on October 21, 2008 at 4:16

Les,

Once the lateral is drilled and frac'd can they extend the lateral.

If not that speaks volumes that Chesapeake was willing to "sacrifice" the early wells per se.

I know they have 7 others that they will put in the unit, but I'm more of the ilk that wants to sell everything but the oink of the pig. But I understand strategy in important. First they have the competition to worry about and then also us mineral owners.

Permalink Reply by Les Bamburg on October 21, 2008 at 15:26

Parker, I think it was more a matter of learning with the early wells plus I believe some were re-entry of old vertical wells which limits the completion options.

I think it is unlikely an operator can and would re-enter a horizontal well for the purpose of extending the lateral. The limited incremental production gain would probably not justify the cost and as you said they have seven other wells planned for the unit.

There has been some discussion in the Barnett Shale about the possibility of re-fracs after 5-7 years but certain operators have said re-fracs are not economic.

Permalink Reply by Spring Branch,mineral owner on October 21, 2008 at 18:18

Les B, You are correct. However the early Chesapeake well....Feist 28, Williams 22, Hunter 26, etc, had IP rates of 2-5 million cu ft/day. The later Chesapeake wells, Brenner 6, Crow 27 had 8 & 9 stage fracs and IP'd at 8-10 million cu ft/day. That is still a far cry from the 3 Petrohawk wells which IP'd @ 17-20 million/day. Their 3rd completion in 15/13 section 36 averaged 15.4 million/day for the first 30 days. That's almost 1/2 a billion cu ft for the first month of production. I'm not a petroleum engineer but a well that does 1/2 B in the first month surely has more than 6.5 billion of recoverable reserves. I've not heard Chesapeake even hint at that kind of production for the 1st month.

Permalink Reply by Les Bamburg on October 19, 2008 at 4:02

Grice, the IP rate is the initial test flow rate which would be reflective of choke size. Notice that most test reports show the chke size in 1/64's of an inch.

A calculated unrestricted flow rate is referred to as "open hole flow rate" but is not reported or used by state agencies.

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Permalink Reply by Grice on October 19, 2008 at 9:38

Les, I reserve the right to disagree with your statements.

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Permalink Reply by Les Bamburg on October 19, 2008 at 17:15

Jay, I am not advocating but the unleased mineral owner is a working interest owner being charged for the cost of the well. My experience is working interest owners have access to any confidential information obtained as a result of unit operations. The information is not being given for free since the owner pays their share of well costs.

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Permalink Reply by Grillin' - MmmMmm on October 20, 2008 at 5:19

I believe Les may be right. I'll try and check with someone who should know. An unleased mineral owner becomes an owner in the well. He may, repeat may, have rights to all well data.

Good disucssion on decline rates. I believe the differences from shale to shale have to do with the higher pressures, the higher flow rates, the differences in the rocks (amount of gas stored in the rock and the rate it moves out) and the stresses on the rocks as the pressure declines. With the data CHK and others have, they can make a reasonable prediction of future declines, but there is a decent sized band of uncertainty. I think as their frac technology, well lengths, etc. continue to be tweaked, the decline curves will continue to change as well.

Also, the lack of tight spacing will have some impact. We may find that when they go to 80-acre spacing, the wells will decline a bit faster. Hope not but it could be.

Permalink Reply by Rick on October 20, 2008 at 13:47

KB, I know I'm preaching to the choir here, because you obviously have a great amount of knowledge on LA Mineral Codes but I wanted to mention the RS 30:103.1 specifies that Operators and producers are to report to owners of unleased oil and gas interests.

LA RS 30:10 says they "MAY" notify unleased owner in a unit, thus allowing them an option before the well is drilled which I can personally assure you, Chesapeake is not doing at this time.

Whereas, LA RS 30:103.1 says whenever there is drilling in a unit that includes land upon which the operator or producer has NO valid lease (like mine) said operator or producer SHALL issue reports to the owners of said interest by sworn, detailed, itemized statement;
1) Within 90 calender days from completion of well, an initial report which SHALL contain the costs of drilling, completing and equipping the unit well.
2) After establishment of production from the unit well, quarterly reports which shall contain the amount of oil, gas, or other hydrocarbons produced from the land in the previous quarter.
b) the price received from any purchaser of unit production.
c) quarterly operating costs and expenses
d) any additional funds expended to enhance or restore the production of the unit well.

And it goes on to explain more as you know, so they should be receiving my certified request for this information this week and I will find out how and what they will do after that.

Permalink Reply by Snake Stewart on October 22, 2008 at 0:34

Hey Spring Branch, I was told by a gentleman that was leasing for CHPK (individual) that Chpk never operated a well above 10 Mmcf . He didnt say they didnt have wels above 10 Mmcf , they just wouldnt be operated above that " for fear of damaging the formation".

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Permalink Reply by Spring Branch,mineral owner on October 22, 2008 at 1:31

Snake Stewart, that could very well be the answer to the riddle. However, though lease brokers are in a position to hear and repeat many stories, few of them have direct pipelines to corporate board rooms. The difference is the Chesapeake wells might make more than 10million/day and the Petrohawk wells do make more than 10 million/day. I'll take do over might any day. What does anyone think about a well making 1/2 B in the 1st month......would that not possibly indicate that there is more than 6.5B cu ft of reserves down there?

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