Exco posted earnings and one item is that they are decreasing the number of wells per section from 8 to six.
From earning report:
The upward revisions due to changes in price were partially offset by downward revisions of 127 Bcfe in proved reserves due to other factors. These downward revisions were primarily related to operational matters for our Haynesville shale properties such as scaling, liquid loading due to high-line pressure and the impact of drainage on new wells drilled directly offset to the unit wells. We have modified our spacing program from eight wells per section to six wells per section in order to maximize our rate of return for each section. We also have plans to reduce line pressure in the field, alleviate loading and implement an artificial lift program.
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Keep in mind that each formation under production can have differing unit boundaries. In the same section could exist a 40 acre Nacatosh Unit, an 80 acre Pettit Unit, a 320 Hosston (Travis Peak) then additional deeper formations. The deeper the more gas prone and the larger the unit footprint owing to perceived drainage. None impacts the others. The problem would come with vertical and horizontal wells in the same formation. In LA the formation where that happens most often these days is the Cotton Valley.
do you think this "scientific experiment" that Exco is using will most likely be isolated to just their company? that is, going from 8 to 6? if a landowner was selling working interest, could or would this affect the sales potential/ value of the property? and if so, in what way?
If and at this time it still is a big "if" all the Haynesville acreage can only support 100 acre spacing and not the currently modeled 80 acre spacing then P3 EURs for the Haynesville are overstated. When Exco decreased the number of wells per section from 8 to 6 they didn't increase the EURs on those six wells enough to offset the loss of those 2 wells. For the old sections where they drilled 8 wells they took an impairment charge based on losing a total of 92 BCF from their prior proved reserves. Since they have drilled 35 sections using 8 wells, it averages around 2.6 BCF decrease for each section. Some of this is guessing on my part as I don't have access to Exco's detailed reserve report.
thanks TC, I have some working interest in 3 sections and am wondering if the "PUD'S" I have created can be sold on an open market, like maybe to a private equity group, And if the 6 well approach will be adapted by other com0panies? any advice?
Shale drilling and lithium extraction are seemingly distinct activities, but there is a growing connection between the two as the world moves towards cleaner energy solutions. While shale drilling primarily targets…
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AboutAs exciting as this is, we know that we have a responsibility to do this thing correctly. After all, we want the farm to remain a place where the family can gather for another 80 years and beyond. This site was born out of these desires. Before we started this site, googling "shale' brought up little information. Certainly nothing that was useful as we negotiated a lease. Read More |
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