What is the expected life of a horizontal well drilled to the Wolfcamp zone in Block 27?
If your mineral rights are tax-assessed by Capitol Appraisal Group, and you download the valuation spreadsheet, you’ll probably see a 35-year economic life along with the forecasted annual production & depletion. However, nobody is yet sure because modern horizontals in Wolfcamp & other shales only started in earnest in 2011-12.
Trying to learn here! I see Block 27 has tons of horizontal wells Block 26 has no horizontal wells but tons of verticals. Is this because Block 26 oil has been depleted due to historic production?
The vertical wells in Block 26 are shallow 2,700’-2,800’ wells and the horizontal wells in Block 27 are 12,000’-13,000’ wells drilled into the Wolfcamp formation
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40 years-ish. At the end of that life its on a 7% decline making 3-4 bopd or something. The reservoir and/or pipe doesn’t fail in 40 years. People mostly decide the “life” by calculating a point where the revenue is equal to the estimated OPEX and call it good.
Nobody is going to gripe about getting checks in year 2050 or whatever, but on a time value of money basis almost all of the value (and reserves) is in the first 5 years or so. So…40 years, 30 years, 50 years…shrug.
Block 27 is in the Delaware Basin. By the W. edge of Block 26 you have come way updip onto the Central Basin Platform. So different deals.
Thus shallow platform wells in Block 26.
I’d attach a map but I’m terrible at drawing contours.
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Not all blk 26 are shallow. In 1975 Amoco drilled the Felmont #1 in sec 19 to 20000.
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It will be interesting to see what happens in blk 26 in the next couple of yrs or more. A 3d seismic project is planned soon. They are reaching out to landowners to get all the permits in place. Some in B12 and B5 also but the majority in 26…
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Sounds like the future might be bright! How can I stay somewhat informed about what is being done? (other than to keep reviewing the Mineral Rights Forum!!)
Let me be more specific: How long does it take the operator (Oil Company) to recover his drilling cost on a wolfcamp horizontal well in Block 27, Winkler County, Texas?
In some ORRI agreements there is a clause that states the ORRI owner does not receive royalty funds until “payout” has occurred.
No idea on that specific area, but horizontal wells we get revenue from (EOG) is somewhere between 4-7 years.
What no-one seemingly wants to talk about is how quickly revenue starts dropping even from new wells. IMO anything below $100/month is starting to scrape the bottom of the barrel, proportionally speaking.
My understanding is that new horizontal wells are just getting better at draining oil and gas in a quicker way–faster return on revenue in the early days, but within ~5 years they soon run out and need new wells drilled nearby to replace them. That is at least my experience with the wells which my family owns mineral interest in.
Horizontal well vs a strait hole in life expectancy in a producing well is dependent on thousands of factors and situations both could potentially be long producing wells. A Horizontal well is used to stay in the oil and gas producing layer as long as they can. A strait hole is like sticking a straw in a cup and a Horizontal well is the same thing just staying in one layer and once they get to the suspected layer staying in the layer as far as they have planned. Its just a pipe that will block sand and rock from filling in the pipe and lets the oil and gas to have a path to the top. Both are just a strainer. So In all reality it depends on how easy the oil or gas can penetrate the materials in the layer and how much pressure is on the reservoir. The fact is both have the potential to last a day to 50 years depends a lot on everything being just right and a little luck. That’s why you cant depend on a well to be a steady course of income. And the estimated percentage of the total oil and gas that is produced from under your land is still well below 20% of what is actually there. So as technology advances It someday will allow another well or to work over the existing well and produce more.
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What’s the word on deeper plays in both Delaware and Central Basin Platform in Winkler county?
Permit for one of Continental Resources Woodford wells with third month production of 37,115 gross bbl according to CONG website:
http://webapps.rrc.texas.gov/DP/publicQuerySearchAction.do?countyCode=495&apiSeqNo=34761
CONG: Lease Drop - Crude Oil Inquiry
- REQUIRED
*Lease Number: (6 digits) OR
*Drilling Permit Number: 881410 (6 digits)
*Beg Period: 2101 (yymm or yy)
*End Period: 2308 (yymm or yy)
Optional Select Criteria
*Taxpayer Number: (11 digits)
Sub Type:
Secondary Taxpayer: (11 digits)
County:
API Number: (8 digits)
Project Number: (10 characters)
Exemption: (2 digits)
Incremental Exemption:
Sub Type Primary Taxpayer # Cnty/ DPI Xmpt Type #1 Xmpt Type #2 Xmpt Type #3 API No./ Proj No. Incr Other Party Taxpayer# Other Party Name Liability/ API GR Gross Barrels Gov Roy Barrels Taxable Barrels Gross Value Roy Value Truck Cost Net Value Type 5/14 Reduced Rate Type 5/14 Tax Due Loc Num Error Status Period: 2303 Pro 17307675490 248/YES 17307675490 CONTINENTAL RESOURCES, INC. YES/50.0 5 1 4 $330.60 $59.82 $0.00 $270.78 0.000 $0.00 0000191 NO Period: 2304 Pro 17307675490 248/YES 17307675490 CONTINENTAL RESOURCES, INC. YES/0.0 0 0 0 $0.00 $0.00 $0.00 $0.00 0.000 $0.00 0000190 NO Pro 17307675490 248/YES 32008096458 GIBSON ENERGY MARKETING, LLC YES/54.0 13,227 2,393 10,834 $1,040,463.34 $188,274.33 $0.00 $852,189.01 0.000 $0.00 0000221 NO Period: 2305 Pro 17307675490 248/YES 17307675490 CONTINENTAL RESOURCES, INC. YES/0.0 0 0 0 $0.00 $0.00 $0.00 $0.00 0.000 $0.00 0000186 NO Pro 17307675490 248/YES 32008096458 GIBSON ENERGY MARKETING, LLC YES/56.0 37,115 6,804 30,311 $2,602,750.81 $477,150.15 $0.00 $2,125,600.66 0.000 $0.00 0000217 NO Period: 2306 Pro 17307675490 248/YES 17307675490 CONTINENTAL RESOURCES, INC. YES/0.0 0 0 0 $0.00 $0.00 $0.00 $0.00 0.000 $0.00 0000001 NO Pro 17307675490 248/YES 32008096458 GIBSON ENERGY MARKETING, LLC YES/56.0 26,481 4,855 21,626 $1,810,010.43 $331,820.76 $0.00 $1,478,189.67 0.000 $0.00 0000201 NO
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