I'm looking for approximately 5-10 acres to possibly place a commercial disposal well. Must have retained surface rights, of course.
Thanks in advance!
I want to get more informed re: production decline rates on wells in Gonzales County. I am in production, own the minerals. Want to do some financial planning and need some feel for how ours wells will decline.
any help would be appreciated by this 5th generation Texan now living on the left coast!
For a property in Gonzales County I have been offered $750 per net mineral acre, a three year lease term, and 20% royalty. How does this stack up to other lease terms in the area? Is anyone interested in offering better terms? Thank you.
Dennis, Totally depends where your lease is located. If in the core of the good production, these numbers are way low (but if your block was in the core I would be surprised you are unleased right now).
If you are in the more updip or thinner EF area, numbers may be more appropriate although the 20% is low for the trend in general.
Robert, you can find decline curves online in the company investor presentations. This will give you a good idea of the decline curve in your area. You can then apply that to your past and current production to get a fair future cash flow model for financial planning.
Hi, I have also been contacted by a firm, San Saba about my mineral interest, in the Freeman-Creagor unit, 543 acres, T Caruthers survey, A-9, presently operated by Ener-Vest. I have no idea what is going on. I called Ener-Vest and they said I would have to put my request in writing to their land dept, which I am doing. I know the Eagleford play is moving that way, but I can get no info if something has been started or not. Is there anyone who could help with this, many thanks, jrs
John- I am in Asset Management with Holland Seevices. We represent mineral owners in maximizing your cash flow of your O&G properties. We do a lot of work in the EFS, and have been helping people get the most value for their assets. If you want to discuss your situation and see if it is something we could help you with shoot me an email [email protected]
Hi Laci, thanks, jrs
Laci, thanks for the reply, but I have gone through EOG's investor presentations and not found any significant discussions re: production declines. My thought is that the declines I have seen are significant enough to wonder about long term strategy for EFS vs drilling and production costs.
If I were EOG, I would be very concerned and have a plan for long term stable production. Truthfully, I believe they do but I can't find it in the public domain.
I agree with your concerns, Robert. I too have minerals in EOG production units and have seen rapid declines in monthly production. The wells on my units aren't on artificial lift yet and that's when I expect to see declines hit the flatter part of their curves. From then on out the profitability of the wells will depend on how much water the wells make and other operational expenses in addition to production decline and the price of oil/gas/NGLs. A 100 or even 25 barrel per day well can still be very profitable to an operator as long as expenses are low enough and the well has already paid off. I'm sure at some point in the future we'll see smaller operators buying some of these old units from the larger ones in hopes of finding untapped potential or just operating them more efficiently for better profit. Where I live there are hundreds of leases drilled back in the early 1900s by Texaco and Conoco (or their predecessors) that have changed hands numerous times over the decades and are still producing under local/regional operators.
Another fact to consider concerning EOG is that they are currently testing enhanced recovery techniques in an attempt to recover more of the oil from the EFS. This may make a very significant impact on future production and profitability. At this point, however, long-term predictions are just guesses with some being more educated than others. For my purposes, I figure on wells declining to 25 barrels per day over five years or so and leveling off somewhere around that. I know decline never stops completely but I just like to keep it simple.
Remember that well spacing in the EF play will vary from 40 to 8- acres (or even smaller than 40 acres depending on what some companies are saying). As a result, multiple wells can be drilled on any one unit - and the subsequent wells may be drilled years after production is first established.
As a result, one can see repeated cash upticks tied to flush production from new wells in the future. And then the additive volume of the stabilized albeit lower rate flow from older wells over time.
Much of the production / cash flow issues tied to these unconventional reservoirs is what will be there for your estate / heirs down the road and not just for you in the next few years.
Totally agree - I have a new well awaiting completion that is only 219 feet parallel from another one. If that downspace test works out successfully I'm not even in the second inning of the game yet. Many of us aren't.
Anyway to find out if something is going on or planned in a given field, thx! jrs
One has to figure that eventually operators (present and future) will end up drilling up a unit / area to its maximum extent.
No way to know this for sure now - key for many operators is to get acreage HBP and then sell it for the production and undeveloped locations (proven and probable) on the acreage.
O&G prices also come into play here as to timing - if prices drop, there is no incentive to infill HBP acreage at lower prices and ROI.
Thx! jrs
John, there really isn't a way to find out future plans for an area most of the time. Companies are very secretive with their plans to the extent that oftentimes one division of a company won't know exactly what another within the same company is planning. If you live nearby an area of interest you can see activity not on the Internet but if not you generally have to wait for drilling permits to be filed. Public company investor presentations can also yield some general information on plans for an area.
OK, I really appreciate everyone's input, jrs
We have been in production on one of the wells for a year. The monthly production rate is easy to plot and almost follows a perfect "curve".
I do not have any inside info on economics and ROI or even how EOG determines drilling strategies for EFS. I believe, perhaps too optimistically, that EOG cannot make enough money on this one well to justify the costs and must have a multiple well strategy. I think I see that in the RRC map data that shows multiple wells in the same area on what appears to be a linear spacing and alignment. I can almost draw a straight line through the well locations per the map coordinates.
I would probably never get the info, but I sure wish EOG could trust interest owners with their strategy. With that info and assuming each well will follow the same production pattern, we can do some serious financial planning.
Again, I have no inside info., but I will risk saying that certainly EOG has a plan. They aren't using a dartboard, even the old wildcatters had a plan.
It will be rare to see operators share any info with royalty owners aside from some very general info. Many times, operators will have groups approach their royalty interest owners to purchase those mineral rights - no way they want you knowing their "master plan".
And I am positive that EOG and other companies have a series of maps showing planned horizontals in any one area.
In EOG's most recent earnings call they said that there were 6,000 drilling locations remaining on their EFS acreage and that each of those are pegged on a map, not derived from dividing total leasehold acres by 40, 80, etc.