Read big “Oklahoman” news feature story today: “New Oklahoma Oil Play Has Devon Officials Optimistic” about giant North Central Oklahoma oil liquids discoveries in the Woodford oil shale with "29 completed wells" and "with 10 of those wells providing initial production of more than 800 barrels of oil equivalent per day". The North Central Oklahoma map area of the Woodford Shale Trend displayed in the "Oklahoman" business section (8-23-13 page 2C story) is centered in Payne County and includes South Garfield County, North Logan and Lincoln counties, and SE Garfield, SW Pawnee, and NW Kingfisher counties. Calyx Energy is trying to lease my minerals in 17N-3E directly on the Payne-Lincoln County border, and I understand drilling permits have been recently filed within 1 to 3 miles northwest, north, northeast and east of my minerals. Do you think this huge discovery announcement will send North Central Oklahoma oil-gas mineral rights prices & lease bonuses skyrocketing? David B. Wallace
I know the Oklahoman ran the article, however, it's not exactly a "new"play. I have been working in it since 2009. A lot of people refer to it as the Mississippian Play but Devon is not the only company to target the Woodford. There are areas where the Oswego has shown decent results also. Longfellow is one of the major companies in the play and has a very nice "sweet spot" in Northern Kingfisher and Southern Garfield. They have said all along that the Woodford was there and would out perform the Mississippi. I guess it's just now being proven to be true.
As far as prices "skyrocketing", I would argue that they have in comparison to where they were four years ago. I was leasing then and in many areas bonuses were pretty low because a lot of the acreage had little activity for quite some time. Now I mainly buy minerals and I never thought they would be going for the prices people are getting right now. (In the areas mentioned above) Exact location can mean a lot. If you study completion reports in the area you definitely see some of those big IP rates, but two miles a way the same operator has a 150 BBL a day IP.
I don't know what Calyx is offering on their lease bonuses but I know that mineral sale prices are pretty high in the area. 800 barrel a day IP numbers are definitely nice, but you have a massive decline rate on these wells. It will be interesting to see what the daily rate is after a well has been on line for 8 or 9 months.
David, also worth mentioning is the term "barrels of oil equivalent" doesn't tell you how much oil production there is. If the oil is 20% then you are starting out with 160bopd which will be 80 or less after the first year. The rest of the boe will be about 3800mcf gas per day, not a bad IP but subject to steep decline also. In terms of boe $100 worth of oil equals only about $20 worth of gas as rated by BTU value.
I'm not trying to sound discouraging but all of the operators put some spin on their reports to impress the stockholders.
I'm not sure why they are calling it 'new'. Slow day for news? Our 3yr lease would have run out in Dec this year, but I've heard that the rig in my profile pic will be drilling a lateral under our section. If we get production, I'll post the info on here.
Most of the information in the article came from Devons second quarter conference call that was released a couple of weeks ago, so I guess they meant this news is "new'.
No "spin" there, Michael. In the August 23rd "Daily Oklahoman" and NewsOK.com article, the vice president of Devon Energy's Mississipian business unit, Kris Goforth said "the company's first wells in the Woodford have produced about 80 percent oil" Unlike Southwestern Oklahoma's "similar" and prolific liquids-rich Cana Woodford Shale, the more recent Woodford discovery in North Central Oklahoma :"produces more oil". Goforth said, "It's a true oil play" she added.
David, also worth mentioning is the term "barrels of oil equivalent" doesn't tell you how much oil production there is. If the oil is 20% then you are starting out with 160bopd which will be 80 or less after the first year. The rest of the boe will be about 3800mcf gas per day, not a bad IP but subject to steep decline also. In terms of boe $100 worth of oil equals only about $20 worth of gas as rated by BTU value.
I'm not trying to sound discouraging but all of the operators put some spin on their reports to impress the stockholders.
O.K David you believe what you read in the press and I'll believe what I read on completion and production reports and my own check stubs. I'm thrilled to death to be profiting on this play, it's free money, but I stand by my statement the operators will put a happy face on every thing they release to the press. I didn't say lie, what I mean is exaggerate.
Michael, thank you for your advice. I know you and Scott are being sincere, and trying to protect us. You both are thoughtful for taking your time and offering your clearly apparent knowlege and experience.
However, I have have been observing Devon Energy for decades. I have had business dealings with some of their top executives. I know first hand that they live up to their company motto, "Integrity". They are also ultra-conservative on their press releases, often even secretive. According to the Aug. 23rd article ("The Oklahoman"-NewsOK.com), they are dramatically putting their money where there mouth is, and have recently identified 1,000 new drilling locations, and just comitted to have drilled 350 new wells by the end of the year in their 650,000 acre, giant, "new" North Central Oklahoma Woodford Oil Shale-Mississippian "true oil" project.
Devon, also, is apparently spending more on seismic activity to expand the project outward. They are also comitting much of the $1.3 billion dollars they received from a giant Chinese oil company to this promisingly prolific oil shale play project. Also, Devon is America's largest independent. It doesn't have to put a "happy face" on for their investors. Their investors are happy already. Therefore, I believe they, too, are sincere. If Devon says they are "excited" about the project, let's all give them benefit of the doubt. They have earned it.
Michael Hutchison said:
O.K David you believe what you read in the press and I'll believe what I read on completion and production reports and my own check stubs. I'm thrilled to death to be profiting on this play, it's free money, but I stand by my statement the operators will put a happy face on every thing they release to the press. I didn't say lie, what I mean is exaggerate.
David,
Just to be clear, I am certainly not down on Devon whatsoever. In fact, we specifically target minerals that are under Devon filings (and a few other operators) because our clients are impressed with the performance of these few companies.
I just didn't want every mineral owner out there thinking they were about to get an 800 BBL a day well drilled on them. I wish they would. Aside from being in the business, I also happen to live 18N-4W, Logan County. I would love to see some of my neighbors hit a nice well.
Scott, I, too, don't want everyone thinking they are all getting an 800+ BOPD well, either. However, I don't want anyone owning minerals in the 7-county area of Woodford-Mississippi horizontal drilling oil play to be ignorant of the potential value of their minerals either, and sell or lease them for far less than their true value.
I used to be in the oil business back in the mid-1970s when oil was still under $12.00 a barrel, and was forced to sell the 8.5% mineral interest I had earned in a future well to be drilled in a field I help discover. My former partner in the discovery failed to inform me that my 2nd "carried" well had come in at over 800 BOPD plus gas in the Mississipian. (They announced it two days later in the newspaper). Simultaneously, the “Tulsa World” announced we had discovered "the largest oil field in Osage County since the 1950s”, and my former partner and our investors sold for millions in profits six months later.
I am grateful for Devon's disclosure, and I am hopefully "excited", along with them, for my small mineral interest directly on the border of Payne-Lincoln counties in 17N3E.
Scott Pipkin said:
David,
Just to be clear, I am certainly not down on Devon whatsoever. In fact, we specifically target minerals that are under Devon filings (and a few other operators) because our clients are impressed with the performance of these few companies.
I just didn't want every mineral owner out there thinking they were about to get an 800 BBL a day well drilled on them. I wish they would. Aside from being in the business, I also happen to live 18N-4W, Logan County. I would love to see some of my neighbors hit a nice well.
All these plays need to be taken in context that "oil" for many simply means "gas liquids" and not mid or high gravity oil. The light hydrocarbons like ethane, propane, butane to me is not "oil" but not gas either. These lighter molecules are not bringing what traditional oil is bringing. So yes, it is company spin. Lots of gas, very little "oil" (40 gravity or less) and lots of 60+ gravity.... Those oil molecules simply cannot squeeze through the rocks like smaller molecules can.
Mr. Shields, that "60+ gravity" aka.condensate has been paying me the same as oil for 2-1/2 years. That is in addition to our high NGL content gas which is bringing about a $2mcf premium over dry gas. As long as it keeps paying like that I don't care what they call it.
A lot of light oils (ethane, propane) are being discounted severely - low as $50/bbl I understand. A friend's son is mixing this light oil with heavy crude to make a blend that is bringing WTI prices. He is working out of Dallas with some stuff in S. OK.
There is way too much gas being flared as well, even ethanes and propanes...
Just got my check, 1234btu gas sold for $6.99mcf. No flaring going on in 2N/4W.
