We own minerals in Sec. 25 above and Mewbourne drilled a great well the Barrick 36/25 2H. Likely payout in 9 months. We wanted to know if there are additional PUDs in this 1280 unit. Thinking about selling the wellbore interest and keeping the potential other locations?
There are no additional increased density OCC cases at the moment. I would not be surprised to see additional wells in the future.
Yes, I would think so. Custer does not seem to have the increase density or multi well HZ pads like we have in the Permian, Altamont in Utah, or DJ basin in Colorado. With this prolific well, I would assume Mewbourne would look to drill additional locations.
Many of the operators in that side of OK are trying to save sections by drilling the first horizontal in the Red Fork or Cherokee or other zones. Once they have the first well in and save the sections with the Held By Production designations, then they come back and drill the infill wells. That time frame can range from months to years depending upon the operator and their drilling budget.
Do you have an estimated well cost for the Barrick well? I’ve heard that horizontal wells cost many millions of dollars. How do you estimate a 9 month payout? Did you lease your minerals, or does a wellbore interest mean that you have an interest in wells drilled in Sec 25? Thanks!
Typical costs for a 2 mile lateral are $10-$13 million.
Wellbore interest is for the single well. All wells drilled go with the general minerals and the spacing for the wells. You can peel off a single well. But the price offered is not likely to be the actual value of the well.
Custer is a little thin, so you might get 1-3 more wells drilled over the next 10 years in the ideal situation. Since the well was completed a year or so ago and already on the decline, the offers are going to be strictly based on the last 3 months of income with a discounted price over the next 3 years on a wellbore only deal. If you do agree to the deal, make sure you make the effective date for all production/payments to match the closing date since they are about 3 months behind in pay and it will likely take the company 30-60 days to close.
What do you mean by “Custer is a little thin”? Do you mean that the wells aren’t performing as hoped? Does this mean that there may not be much more drilling?