Question. 5 of the wells Bayswater operates went from 7K BBBLs EACH a month to ZERO in February. Four months later they produce less than 1K TOTAL with 3 still not producing.
Bayswater continues to say.
first there was a Harmonic issue and ONCOR kicked them off the electric grid.
then they replaced pumps. Say they didn’t stop harmonics.
so they put generators on them 3 months ago.
their excuse now is that the wells have so much water from being down the generators are just able to pull water and no oil.
lastly, about March the wells took a frac hit from 5 new wells on the west half of the section. Bayswater says it was normal. Expected. And no longer an issue.
bayswater insists the oil is there and the wellbors are intact and it’s only an issue of getting power generation (ONCOR) to get production back.
We listened. We remained patient. I am now calling BS.
Thoughts out there? Does the whole of their reasoning make sense. Direction? Legal action? Suck it up cause there’s nothing we can do?
Please add the state and county and location description. It can take months to get the frac water out of a well. Low pressure on the pumps will extend that time frame.
Thanks for the reply. These wells were fracked in early 2021. Production was 40K per well. Northern Howard County just above Snyder Highway. So the water was long gone.
Surge drilled 5 wells on W2 of the section in January/February of 2023.
It sounds like they provided a detailed explanation. Which is more than you will get from some folks. Yep, the Jackpot wells went to hell in Jan/Feb '23 and have not yet come back. Assuming those are the correct wells.
If you think it is BS, what do you think is going on, are they hiding the oil from you? Or does BS just mean “this sucks”, which yeah, no doubt, that kinda sucks.
The water is never long gone. Yes each well gets +/- 500,000 bbls of frac water, and a lot of that gets recovered, but these wells are going to make 2 million barrels of water. Most of it from the formation. This is what happens when you frac a giant pile of oil/water. 3-4:1 WORs means you need artificial lift or you get nada.
According to allocated prod data, the average Jackpot well had a peak month of 16767 bo
It’s a risk business. For you and for them. Sometimes things don’t go your way. In the absence of some deep state stuff, I would assume they would like to make more oil from the wells and are trying to do so. Doesn’t make your checks any better if it doesn’t happen. Could be worse, you could have paid $40m for those wells.
You know I learned in my first week at Arthur Andersen back in 1987, that if ever find myself as the Smartest Guy in the Room, then I am in the wrong room. By the sardonic tone of your reply, me thinks you never got that message. To that end, let me address your comments in order.
Um, no, I don’t think anyone can hide a commodity from me. Nor would they. To me - and I could certainly be wrong - seems you should have understood what I meant and just empathized without the extraneous comment. But that’s OK. Honestly, I dealt with people like you my entire career.
I have extensive experience in oil and gas - operations and financial - so I fully understand the hydrology aspects of HW drilling and operation (and as a matter in course, make money off of that very water in other investments).
Will take your word for it on average BOP. At least one well was in excess of 2,600 BOPD at peak. Those wells produced amazingly well and at the height of oil prices. Generated a lot of income for all involved. Very grateful.
Don’t need the money. I figure it’s about $10K a month. Not a big deal. This is my kids money -
actually this is more like my grandkids money. I take an interest in ensuring all assets are fully utilized
at a generational level. I believe that every single problem has a solution. In some cases, that solution
is the solution of last resort (divorce for instance as a real world example). However, the company
has assured me they are not concerned in any way that these wells are no less economical than prior
to the “harmonics issue”. literally a quote that they are not worried at all about these wells producing.
So that tells me there IS a solution. My intuitiveness further tells me that when you have on the order
of 30 wells in stages ranging from Spud to Frack, your capital priorities are likely to be diverted to
those endeavors. Logic. Economics. And yes, nothing I can do about it. I’ll happily wait it out because
Bayswater has done a great job as an operator over the past few years.
It is a risk(Y) business. You ever done Risk Weighted Cost of Capital calculations in terms of assisting clients in M&A decisions, for instance? It’s fun. Yeah they want to make oil and they will at some point. That’s fine with me. Honestly works better that way. I’m just impatient and was trained to maintain a healthy skeptisim.
As to your privation reference that I didn’t have to pay for those wells at $40M, to me, that doesn’t ring up as financially significant the way you intended. Based on my data, I estimate those wells generated 8/8ths Gross Revenue of approximately $75MM through last production. So 6/8th’s of that is $56MM on a $40MM investment. Me thinks it highly unlikely LOE totaled anywhere near $16MM (the Break Even Delta) over those 12 or so months, so that net profit in just first year easily cleared the RWCOC Hurdle derived when drawing up the AFE to move forward (in this highly de-risked world of drilling today given the technology involved).
So, thanks for the comment. I had fun responding.
I’m certainly not the smartest guy on this board. That is why I get my weekly updates. Learning is a lifetime process. And my goal is to share what I know in a constructive, positive manner.
Ha. Fair enough. Nice strawman/flex combo. Glad you had some fun.
Yes, I was a wiseass, appy polly loggies. I mostly am just here to try to help. Along those lines, if you don’t care about the money and you understand the hydrology and you will happily wait it out because Bayswater has done a great job as operator, then all is well in the world and no problems need solving.
The gross revenue estimate on the Jackpot wells is off by about $240mm, give or take. At least that was my read on it, but they always told me I was lacking in extensive experience in the financial and operational world of oil and gas.
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