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Permalink Reply by Bobi Carr ("parker") on November 30, 2008 at 9:17

Hi Pilgrim,

Look at the discussion, "Decline Curves, Barnett vs. Haynesville". There is lots of good information and explanation.
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Permalink Reply by Snake Stewart on November 30, 2008 at 9:31

Parkers right Pilgrim, but I wouldnt think at this point in the game that you could count on the 8 wells all at once. Theres a lot of good info out there but I believe its too early to really know the curves throughout the whole play. There needs to be a lot more intel added to get a good clean average on the curve.

Some of these wells have too much pressure to even frac due to the rateing of the casing pipe. There are entirely too many variables to make a statement that would be equal throughout the entire play. Rest assured that the O&G's will continue to choke until it is worth removing the choke. I have been told that damage can be done to the formation if the flow isnt controled. Their main goal right now , especially with lower N/G prices is to hold units by production.

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Permalink Reply by Skip Peel - Mineral Consultant on November 30, 2008 at 10:06

Snake, you're correct as to the pressure potentially damaging the formation around the well bore. Disrupting flow. But the quotes that I have seen from CHK, specifically A. McClendon, have stated that production on choke was intended to hide IP results from competitors. Makes sense to me. And CHK's Super Pad system of development does not make sense unless multiple wells are drilled in succession from each. Of course the system was designed, and deployment began, back in the old days when CHK had money. And the cut back in rigs may have a significant impact on those plans also. Where there are Super Pads now, or in the future, I suspect those sections will be drilled up on a relatively short time line. Other sections may just get a single well, vertical or horizontal, to hold the lease by production. Those leased to CHK should hope that the new stock offering is successful and/or that CHK finds some joint venture partners with cash. And on decline curve data, you are also correct in stating that there is little hard data at this point in HS development. However, the ability to project decline is not just based on data from existing, producing wells. There are "tight gas shales" being drilled across a wide range of shale types in many different locations. And the science is evolving fast. The lowest decline curve projection for the HS that I have seen is 75%. CHK says 81% (based on actual production results). I would consider that a reasonable range. And would not bet against CHK's projection being closer to the norm for the HS. Regardless of what the eventual verified range is, the fact remains that these wells have a steep hyperbolic decline curve and royalty owners should be aware of it and make financial decisions accordingly.

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