Replies to This Discussion

Permalink Reply by Columbia1 on January 31, 2018 at 3:53

Well said Skip.  Hope folks pay attention to your comments.

Permalink Reply by Hydrocarbonite on January 31, 2018 at 12:20

Thanks Skip,  points well made and taken.....patience and vigilance!!

Permalink Reply by Rock Man on January 31, 2018 at 13:49

Skip, thanks for posting this.  

Permalink Reply by John Matherne on February 5, 2018 at 7:34

Good advice Skip

Permalink Reply by Craig Wascom on February 5, 2018 at 12:55

I agree Skip! The offer so far is insufficient in my opinion. As I have said before your proximity to EOG area of interest is important. If there is some distance I can understand taking  the bonus money as this is all we have seen in the past. However we must remember how fast technology is advancing. What was uneconomical 5 years ago may not be now.

Permalink Reply by Rock Man on February 5, 2018 at 13:20

Lots of things can change in the AC section as you move away from where EOG has been drilling. Depth, reservoir quality (porosity and perm), natural fracture presence (or lack there of), etc. all will impact prospectivity.

In my opinion, this is no "distance" factor that mineral owners need to consider when comparing their areas to where EOG has drilled.

And I will bet that not all of EOG's present position is of equal prospectivity as to the AC section.

I am certain that EOG has mapped every log derived parameter that is available across an area that is much larger than their present acreage position (130,000 acres as noted in one publication). Prior to moving into Louisiana, EOG had chased this same AC play in Texas where they had massively more subsurface data (as a result of their Eagle Ford drilling - which gave them a "free look" at the AC section on the way to the EF).

And they are using that technical information to help direct their efforts in Louisiana..

One can assume that they have a good idea as to what is best to give them optimum well results (e.g. latest AC wells on their Kilimanjaro lease in Karnes County were 6386 BOE per day (82% oil) and 5800 BOE per day (also 82% oil) on one inch chokes for 8298' and 2800' laterals, respectively.

Comparing this to their Avoyelles Parish IP rate of 1313 BOE per day (85% oil) for a 4275' lateral makes a statement about some possible differences between the ultimate AC sweet spot and what is present in Louisiana.

But these initial results in Louisiana may improve over time as the recipe' for success is figured out (as to landing zone and frac approach).

Or it may not improve very much since there are no guarantees of improved completion performance.

One of my major points here is that EOG has done more work on this play than any other company in the industry - and has more info too (with respect to core and high tech logging info as well as how to drill and frac and produce a well).

They have developed an approach that has been vetted over time as they have been the leaders in getting into such plays as the Eagle Ford, Austin Chalk frac play and certain parts of the Permian Basin. Plus this approach has proved successful in evaluating certain plays that have not "worked" which they eventually abandoned over time (e.g. Pearsall Shale, Goodland Lime, etc.).

They are in what they believe is the "best" part of the AC play in Louisiana. Other areas have been intentionally bypassed by them - and these are the areas that other companies are trying to lease to get into what they believe is something similar to EOG's area of interest.

As Skip has noted, the key in leasing (aside from each individual's personal financial situation and desires) is the balance between a getting a one time lease bonus versus getting an operator who will drill multiple wells (laterals in this case) that will yield unconventional reservoir royalty payments over time (i.e. high initial rates and payments that drop to about 10% of the initial rate after 3-4 years of production).

There is no guarantee that the AC play will work over a widespread area in Louisiana. The super sweet spot in Karnes Co Tx is very limited in areal extent - but the play (on a lesser extent) covers a much larger area. And well results dictate lease terms.

I would recommend that mineral owners do their best to get an understanding of what the subsurface AC section is like in their areas and how it compares to successful AC areas. Depth, thickness of section, historical drilling success, etc. are all important issues. the Louisiana on line data base (SONRIS) is a great resource for information. If you have a larger position, getting a consultant to provide a generalized analysis may be something to do.

Trying to understand the limitations or pluses in any one area can be a negotiation chip to use when dealing with brokers. 

Not all minerals are created equal. Just as not all operators are as good as others (e.g. EOG). This combination can give one a wide range of results in a complicated play like the Austin Chalk.

This is no different than what has been seen in similar unconventional plays like the Eagle Ford, Marcellus, Utica, TMS, Bakken and Permian basin (to name a few).

Permalink Reply by Craig Wascom on February 5, 2018 at 13:52

Rock Man are you the same Rock Man that post on the mineral rights blog?

Permalink Reply by Rock Man on February 5, 2018 at 14:01

yep

Permalink Reply by Thomas Maglone on February 7, 2018 at 3:24

Do you know how deep the wells are in Karnes County, compared to Avoyelles Parish well. thanks

Permalink Reply by Skip Peel - Mineral Consultant on February 7, 2018 at 3:35

I picked a completed EOG horizontal AC well in Karnes County, TX at random.  The Fugi Unit 104H has a True Vertical Depth (TVD) of 11,129' and a Measured Depth (MD) of 17,727'.

The EOG Eagles Ranch 14H has a TVD of 16,026'.

Permalink Reply by Thomas Maglone on February 7, 2018 at 4:23

Thanks, that's a big difference between ( TVD ) and ( MD )

Permalink Reply by Skip Peel - Mineral Consultant on February 7, 2018 at 4:30

The difference in TVD and MD is the lateral length in the Eagle's Ranch.  ~6598'

The difference in TVDs between TX and LA is the important fact.

• ‹ Previous
• 1
• 2
• 3
• 4
• Next ›
• Page