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Permalink Reply by Skip Peel - Mineral Consultant on May 24, 2022 at 9:57

This is pertinent to Louisiana's permitting process.

Depends on the period when they were filed.  The advent of cross unit laterals caused a good many approved field orders for alternate unit wells to be replaced by new applications for the longer lateral wells.  Since then the percentage of approved field orders to be drilled is actually quite high.  It should be noted that field orders are effective indefinitely unless dissolved by a later order. Just because an order is a couple of years old doesn't mean it won't be drilled.  Also operators generally apply for more well "slots" then they intend to drill at one time.  For example, a Haynesville operator might apply for nine well slots based on state spacing rules, Haynesville and Bossier, and then take out permits for four.  It makes sense to have the other approved slots in hand whenever the next group of wells is placed on the drilling schedule.

Alternate well applications are not well permits.  Before a company can apply for a "permit to drill", they must have already gotten approval for the well spacing by way of an application on the Commissioner's public hearing docket and been approved for a field order.

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Permalink Reply by Jed Clampett on May 24, 2022 at 10:52

 OK excellent. Skip. 

From a  2 mile lateral Comstock Hearing Letter to spud date.....what is your best guess estimate on how long that average period takes? 

Assuming filed this month with Nat Gas prices at current levels.

Thank you.

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Permalink Reply by Skip Peel - Mineral Consultant on May 24, 2022 at 11:02

LOL!  Forget natural gas prices, they have no bearing on drilling schedules.  As I always say, details are important.  You need to know how many "live" undrilled well permits that Comstock holds.  You do this by searching SONRIS for Comstock wells and clicking on all the Status 01 wells to see which ones have reported being spud, already drilling.  Then you check out how many rigs drilling Haynesville wells that Comstock has under contract.  You do this by reviewing my weekly rig report on the Main Page.  Then you look at the individual undrilled, un-spud permits to see if they are six month permits or twelve month permits.  Unfortunately there is no such thing as an average time from letter to spud.  There is too much variation to draw any informed conclusion.  Best to wait until a rig spuds those wells to start speculating on the length on time to completion and then length of time to royalty payments.

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Permalink Reply by CG on May 26, 2022 at 4:25

Jed,

What S-T-R are you in?

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Permalink Reply by Jed Clampett on May 26, 2022 at 4:43

 Hi CG!   Well, we own many S-T-R in Haynesville shale.  More and more Hearing Letters are being filed so nothing specific. I was just wondering in general and Skip said quite high % get drilled now so I guess we wait. I found a place on the internet that said Comstock has 7 rigs running if I see that right. 

Comstock hedges gas prices and use some % collars so royalty owner gets to take advantage of rising prices but some hedges are not. collared.

Nat gas futures prices $9.33 as I type this.  

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Permalink Reply by Jed Clampett on June 4, 2022 at 2:58

  "Also operators generally apply for more well "slots" then they intend to drill at one time.  For example, a Haynesville operator might apply for nine well slots based on state spacing rules, Haynesville and Bossier, and then take out permits for four.  It makes sense to have the other approved slots in hand whenever the next group of wells is placed on the drilling schedule."

  If an operator files via Hearing Letter 6 Haynesville formation wells, what is the main reason they would only drill 3 (for example)?  Why not drill all 6 when the pad and rig is set up?  I have heard 6 high intensity frack wells are the max per section now.  What reasoning would they have to come back later and drill the other 3?

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Permalink Reply by Skip Peel - Mineral Consultant on June 4, 2022 at 3:48

Time and money.  And pipes.  Some units will get only Haynesville wells some will also get Bossier.  Lots of wells required to fully develop a unit.  Best to get all or most lateral slots approved in one filing that way it provides flexibility for the drilling schedule.  It takes weeks to go through the process of an application on the Commissioner's public hearing schedule and the required notice period.  An operator can get one or more well permits in a day.

Jed, think about how productive the current well designs are.  Sure an operator could drill six at one time but what if the pipeline has existing capacity for only three?  In the early days of the play, experienced mineral owners were amazed at the size and number of gathering lines being built to support Haynesville development.  Those lines have limitations today that inform how many wells are drilled at one time.

The only recent examples of operators fully developing units with all allowable wells (only Haynesville reserves) would be Comstock in their JV with USG Properties in the Greenwood-Waskom Field and Trinity, the operator that replaced Comstock in that JV, in the Greenwood-Waskom Field and the Longwood Field, North Caddo Parish.  I think the fact that USG Properties is the financial partner explains why that is the case.

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Permalink Reply by Jed Clampett on June 4, 2022 at 4:40

  Interesting perspective, Skip.  It makes perfect sense take away must be planned. Once HZ well productivity declines after several years, more can be drilled within the section to replace lost production and return pipeline to max capacity.  Seems to me a favorable problem for NG pricing.

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Permalink Reply by Skip Peel - Mineral Consultant on June 4, 2022 at 4:52

Although they may look random, drilling schedules take many things into consideration.  Lots of moving parts must be factored in from units with very low production that need new wells to hold leases to drilling commitments in lease assignments.  There is method to the seeming madness.

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