Replies to This Discussion

Permalink Reply by Land Rat on November 21, 2013 at 13:16

>>>>>>>>>

Permalink Reply by obed w odom on November 21, 2013 at 18:36

Very interesting, Tony. Let's hope TMR Exploration  has some expertise in fracking the Brown Dense. This well seems to be about 10 miles due south of the Brammer well, 2 miles east of the Lafayette Co. line, and 2 miles north of the state line.

Permalink Reply by Jim York on November 22, 2013 at 3:36

The AFE in the Exhibit has only $40,000 for "Acid/Frac". That might buy a small 20K or 30K lb frac.

Permalink Reply by Matthew Kable on November 22, 2013 at 6:02

The proposed well is going to be a re-entry of an existing well where it appears TMR Exploration will be drilling deeper in an existing Smackover well to penetrate the LSBD.  That certainly explains the low $1.94M total well cost as compared with some of the SWN wells which cost several times that to drill and frac an entirely new well.  Yes, probably will be a small frac. 

Also, it's interesting that SWN will have an interest in this well as they are listed in Exhibit A as a leasehold working interest owner and in Exhibit B it is clear that TMR approached SWN about a farm-out or their participating in the well.  SWN's got to like this, as they'll certainly be interested in the data that TMR gets out of this well.

Permalink Reply by Skip Peel - Mineral Consultant on November 22, 2013 at 6:50

SWN has not committed to participate as a Working Interest as of the application date.  That could change but they did decline to participate in the recent Will Drill well owing to the planned depth.  I'm unclear on whether a non-participating WI would have access to the science generated by the operator.

Permalink Reply by Matthew Kable on November 22, 2013 at 7:21

Good point.  SWN does still have the option of electing to participate in the well, in which case I would expect they'd have access to data.  Alternately, if they were to be force pooled in lieu of electing to participate, and still end up having to share to some extent in the well costs, it would seem to me that it's in their interest to reach some sort of agreement with TMR.  But what do I know? I'm just an uninformed bystander rooting for SWN to unlock the LSBD as economic. 

Permalink Reply by Skip Peel - Mineral Consultant on November 22, 2013 at 7:30

SWN will look at the well design and location to make a decision whether to participate as a WI.  If the AOGC approves the TMR application, SWN's interest will be force integrated in the unit.  If SWN chooses not to participate they will incur a risk penalty to be determined by the Commission, usually 400% of proportionate cost.  They will receive no compensation until, and if, the well recovers 400% of its cost to drill and complete.  I suspect that there has been sufficient discussion with TMR prior to the application being filed for SWN to make their decision.

Permalink Reply by Skip Peel - Mineral Consultant on November 22, 2013 at 13:26

Jim, any idea why SWN's vertical BD  well cost is north of $6M?

Permalink Reply by tony allen on November 22, 2013 at 16:12

According to Mueller they hedge. They are vertically integrated and that is a hedge. He said "It is like taking money out of one pocket and putting it in the other." He was referring to the mid stream but it applies to all aspects of their business model. If they book well cost at $6M and $3M are to subsidiaries then you avoid severance tax on $3M of production but the profit stays on the companies bottom line. Of course there is the added bonus of telling all non-consenters "You won't get a dime until we get $30M".