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Permalink Reply by M. Mcwilliams on April 20, 2009 at 2:37

Unbelievable! Any insight into how the decision is made to drill any given well as a vertical rather than a horizontal? Considering Exco's other Haynesville wells - the Lattin and Oden wells - what goes into a decision to drill one as a vertical? Does it have to do with the timing of the drilling?

There are CV and HOSS wells producing more than 143 mcf/day!

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Permalink Reply by The_Baron on April 20, 2009 at 4:10

The reason to drill vertical is to HBP at minimum cost. With a HA horz. you are looking at $8 million+, a horz can be drilled for a fraction of that cost.

If they have leases with vert. pughs, they have to drill to the HA in order to hold those depths.

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Permalink Reply by The_Baron on April 20, 2009 at 4:41

But,....the prospect might pay out if they can hold their leases and drill later, or just flip the leases.

It is in the interest of the Lessee, not the lessor.

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Permalink Reply by The_Baron on April 20, 2009 at 5:28

All part of the oil buisness.

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Permalink Reply by M. Mcwilliams on April 20, 2009 at 12:02

I have another question. Is there a way to tell whether a well will be drilled as a horizontal or a vertical based on the permit or unit order application?

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Permalink Reply by M. Mcwilliams on April 20, 2009 at 23:41

Actually, Jay, I think I know the answer to my question. I asked at the pre-application hearing for my unit whether the well would be drilled as a horizontal or a vertical, and I got no answer. It was pointed out to me that a vertical would be cheaper, and the consultant acknowledged that "it is rumored" that the companies are drilling verticals to hold the leases, but that was the extent of the conversation.

Permalink Reply by Les Bamburg on April 21, 2009 at 1:28

MM, the unit application does not tell but the well permit does have information about vertical or horizontal. Sometimes the well name indicates a horizontal (ex KB Smith 32H No 1) but not always. There have been a few cases of well permits being revised to horizontal after being approved as vertical.

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Permalink Reply by M. Mcwilliams on April 20, 2009 at 6:12

Yes, I knew about the Camterra wells, but have never looked at the figures for them.

The reasoning about cost makes some sense, but at this rate, it would seem that it would take so long to pay off the well costs that the company would lose any benefit from a less costly well.

Sure gives new meaning to the warning that "if you don't lease and take a bonus, you may get nothing".

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Permalink Reply by The_Baron on April 20, 2009 at 6:31

Or at least take a long time to get somthing.

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