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Laredo Petroleum Investor Update September 2013
http://www.laredopetro.com/media/28666/investor_update_meeting.pdf
Yes, The Big Dog and Endeavor owner was on more than once. Also a smaller independent company whose name I can not remember. I looked up one of the wells the smaller company owner mentioned because I thought I heard him say that it might produce $400,000,000 in oil. Maybe when this was filmed the production curves were poorly understood?
Rock Man said:
The "Black Gold" series is based on the Big Dog drilling company that is owned by Endeavor Energy - perhaps one of the most active drillers in the Permian Basin. Although this drilling company that has some degree of uniqueness since it is owned by a private operator, much of the "reality" that I saw the few times I watched this show was contrived (IMO) for TV. The things that took place would get people fired immediately as well as having safety groups shutting down rigs in a heart beat.
The Big Dog rigs tend to be a bit antiquated and operations are run on a shoe string to keep costs as low as possible.
Side note - even after doing a huge deal with Exxon/XTO about 18 months ago, Endeavor is looking to sell off its Delaware Basin assets to raise capital to pay off debt and keep their Midland Basin drilling program active.
The radial mini horizontal drilling shown in the video is a nifty approach for shallow, low pressure drilling operations. Temperature, pressure and mechanical limitations make it a non-viable option for most plays being made today across the industry.
As always, just my opinion on many of these issues.
This is a nice website which has a webpage with rig counts by county http://clineshalecentral.com/news/weekly-rig-counts/
http://www.cnbc.com/id/102505215 (long wavelength)
http://www.bloomberg.com/news/videos/2015-03-16/republicans-lack-will-on-deficit-fight-stockman-says (shale states)
Thanks for posting - some people don't want to hear the reality of what is happening but it is good for companies like BP to come out and say this
Are you thinking this could be a seven to ten year price depression? I am going to listen to REI's conference call tomorrow. I am interested in to see if the no/low debt philosophy is maintained and how it plans to move forward.
Rock Man said:
Thanks for posting - some people don't want to hear the reality of what is happening but it is good for companies like BP to come out and say this
Don't know about overall duration but years of low prices is to be expected IMO.
Will we ever see the $100 oil days again in any sort of reasonable time frame? Not unless something crazy happens to throw a hand grenade into the O&G economy
http://ww2.cfo.com/bankruptcy/2015/03/dark-clouds-looming-small-shale-oil-producers/
"In aggressively financing shale-oil development, the authors say, credit markets have ignored “some fundamental and immutable realities of the energy-exploration business — namely, that these E&P companies are high-cost producers of a fungible product in a highly cyclical industry in which they are pure price-takers.”
http://clineshalecentral.com/target-energy-provides-corporate-update/
Value of the Horizontal Acreage
The horizontal potential refers to the inherent value in the leases associated with future horizontal drilling in the Wolfcamp section, including the Cline Shale that is ubiquitous in the Fairway area. This was previously assessed in an independent technical report as part of an Independent Expert’s Report prepared for a Target general meeting held in 2012. The 2012 independent technical report valued the Cline shale potential at US$4,000 — US$6,000 per acre, with a discount applied to US$2,000 per acre to reflect the risk associated with the lack of drilling that had taken place on the Fairway leases. At the time of the preparation of the 2012 independent technical report the WTI Spot oil price was approximately US$88 per barrel.
Thanks, AJ. The break will help us understand the technical side of fracking. The "oil bidness" is known for re-inventing itself.
Is there any upper physical limit on how long a well can remain uncompleted? I think I have heard of decades old wells being re-entered. I wonder if "the Cline Shale potential" in the first article reflects net profit potential because it would cost much more than that to drill the wells needed to tap the shale in a section?
Ralph T said:
Thanks, AJ. The break will help us understand the technical side of fracking. The "oil bidness" is known for re-inventing itself.
I don't believe that there is any limit as to how long a well sits unperforated and unstimulated aside from the time value loss of the capital that went into the drilling and casing the horizontal wellbore.
I am sure that operator will maintain the wellbores while they are waiting to be completed, e.g. "pickle" the wellbores with KCl or similar fluid plus monitor shut in pressures to make sure that there are no issues of concern as to casing integrity over time.
Interesting article on the Fairway area.
What the operator is not saying is that Fairway is just east of a very poor Laredo Cline shale area (i.e. Lazy E Ranch) plus that the Laredo "Canyon Shale" activity is miles away in what appears to be a different section than what is present in the Fairway area.
On top of that, the Wolfcamp horizontal activity that the Fairway operators are referring to is miles away to the noth of Big Spring and that the section in Fairway is very different than that in the successful north Big Spring area.
AJ said:
http://clineshalecentral.com/target-energy-provides-corporate-update/
Value of the Horizontal Acreage
The horizontal potential refers to the inherent value in the leases associated with future horizontal drilling in the Wolfcamp section, including the Cline Shale that is ubiquitous in the Fairway area. This was previously assessed in an independent technical report as part of an Independent Expert’s Report prepared for a Target general meeting held in 2012. The 2012 independent technical report valued the Cline shale potential at US$4,000 — US$6,000 per acre, with a discount applied to US$2,000 per acre to reflect the risk associated with the lack of drilling that had taken place on the Fairway leases. At the time of the preparation of the 2012 independent technical report the WTI Spot oil price was approximately US$88 per barrel.
Frac sand exec to slumping oil producers: You’re not going to drill...
Thanks for both replies. Yours is the first time I have heard of 'pickling' wells. Are section potentials expressed in dollars per acre common in the industry? Would the "Cline Shale potential at US $4000-US $6000 per acre" be after drilling, completion, lifting, transportation, and taxes profit, or is US $4000-$6000 the value of the oil in the ground?
Rock Man said:
I don't believe that there is any limit as to how long a well sits unperforated and unstimulated aside from the time value loss of the capital that went into the drilling and casing the horizontal wellbore.
I am sure that operator will maintain the wellbores while they are waiting to be completed, e.g. "pickle" the wellbores with KCl or similar fluid plus monitor shut in pressures to make sure that there are no issues of concern as to casing integrity over time.
The $ per acre numbers are what the owner believes the value of their acreage is if another company were to purchase the acreage.
Of course, there values are in the eye of the owner and may be a bit skewed.
That makes much more sense. Thank you.
Rock Man said:
The $ per acre numbers are what the owner believes the value of their acreage is if another company were to purchase the acreage.
Of course, there values are in the eye of the owner and may be a bit skewed.
"... But for the first time this year production actuallydropped 36,000BD overall and 37,000BD in the lower 48. This runs contra to almost every media report and sell side analyst that has been spouting off that production would continue to rise thru at least 3Q rising 500,000-700,000B/D for the year."
"One last point to note is that producers are focusing on the lowest cost regions that produce the most oil. These types of supplies aren’t endless and will deplete in next 12-18 months which will pose more challenges for producer’s balance sheets if prices don’t rise. But in all likelihood they will as producers are forced to go beyond the bounds of these regions to find supply. Watch for analysts to begin to wake up to this reality as 2015 plays out."
EIA Drilling Productivity Report 4/13/2015
http://www.eia.gov/petroleum/drilling/
(click on "Permian" under "Contents" at the right side of the page for expanded information)