Spur selling out?

[Wendy1]

So, I heard though the oil patch that Spur is selling out here. I am assuming it’s true since it came for someone that would likely know. How does that affect royalty owners? Will wells shut in? Would there be skips in payments?

[NMoilboy]

Shouldn’t affect you (much). Wells should keep producing and payments will keep coming. From where I sit Spur and Silverback both paid too much for the Yeso trend rights. Unsure who would buy them out.

[Justinfo]

Two questions

1. The 20H well was following a reasonable but steep decline curve in oil production but the last two months, December and January, dropped like a rock. Does anyone know how to get some info on this. Is it due to a fixable problem or is this just the nature of things?

2. Given the decent production we have seen from at least three of the wells does it make sense for Spur (or a new owner) to think about drilling any of the other 4 or 5 wells that were permitted? Maybe Spur doesn’t want to put up the money to drill more wells if they are thinking about selling but a new owner might. Any thoughts?

[NMoilboy]

The 20h well cratering is not normal. The nature of things is that we would just be guessing and I doubt anybody that knows would tell you. You can call spur and ask them but I doubt they would tell you. Or have Wendy drive by and ask the pumper, that usually works. Myself personally I’d first assume that its a tubing leak or artificial lift failure, and thus fixable.

They have not drilled more than the 4-5 wells per half mile wide unit anywhere on the trend. I would guess this is all the wells there will be for a while. You’d think the other (non-20H) wells are economic, but these are 1.5 miles long (longer than normal Yeso wells) so the capex is higher and these are probably not killing it. It’s also kind of hard to go back and drill more wells at roughly the same depths once you have produced these for a while. Need to develop it all at once.

So, yeah, for me, the Trudy wells are a little disappointing. But its still early, if they flatten out and make > 100 bopd each for the next 12 months then its not too bad.

[Justinfo]

Thanks for the perspective and comments. I’m hoping it is a fixable problem at 20H. I guess if there was going to be a problem those two months are not the worst time to lose production because the oil price was weak, assuming we get the volume back at some point. WTI is back up over 80.

I think we had a discussion about the 1,5 mile length a while ago. Still not quite sure what the rationale is especially since SPUR seems to be drilling 1 mile well elsewhere. I’m guessing that adding 50% to the length doesn’t add 50% to the total capital cost if the rig is in place.

Is Yeso the only producing trend in this area? I think our lease only covers Yeso but I’m not sure

[Justinfo]

I did some numbers on the volumes so far for the Trudy wells. Oil % Chg|Gas % Chg

|Jul-23|306%| 174%| |Aug-23|-11%| 5%| |Sep-23|-15%| -15%| |Oct-23|-25%|-16%| |Nov-23|9%|18%| |Dec-23|-25%|-16%| |Jan-24|13%|20%| |Feb-24|-16%|-7%|

A little crude but it looks like total volumes are declining pretty fast. Or is this a normal trend? Anyone have a thought. BTW, 20H seems to have gotten straightened out after a sharp dip earlier.

Thanks

[clight]

@Justinfo not sure exactly whats going on with the Trudy 20H well but its for sure losing pressure which Spur will probably figure out how to fix (fingers crossed)!

[Justinfo]

I do wonder why Spur decided to drill 1.5 mile horizontals instead of sticking with the 1 mile horizontal they seemed to use elsewhere in this trend. Maybe just as an experiment. A bit of good news is the WTI price has been above $80, so the next few checks should reflect that.