The landman told me that it would actually work in our favor when they upped the acreage but it killed our percentage. I have no idea how it works but it changed the percentage from . 0 to . 00. This process is kinda scary and exciting to a newbie. Lol
As I recall, the production curve average for Spur wells you kindly shared assumed one mile horizontal wells. Since these are 1.5 mile wells would it be logical to assume the production would be higher? Maybe not 1.5x the 1 mile wells, but somewhat more. I guess the flow rate is limited by the pipe diameter. Maybe the decline curve is a bit less steep? Guess we’ll find out in the next few months.
Yes, I think you are on top of it, I would assume the wells will make a bit more initially and have flatter declines and in the end they should make about 50% more total production.
Wendy:
In general the wells being longer or shorter should not have much effect. If for instance you own in Sec 7 alone, you should now (i.e. once they include Sec 6) own 2/3s as much of a well that makes 3/2s as much. More or less. I don’t know exactly where either of you own in these sections.
It should not be much black magic. Its just: I own X decimal in this tract, this tract is Y fraction of the total acreage dedicated to the well, I therefore own X * Y decimal in the well.
So for example, if you own a 2% ORRI in Sec 7 and nothing in Sec 6 you should have a 4/3 % decimal in the well (.013333333).
Well, just got another offer to buy our Trudy acreage. Offer is $23,400 per NMA. Pretty nice. By my very rough calculations that amounts to about a year’s worth of production for our share from the nine wells approved. We aren’t interested in selling, but it is nice to know someone with a lot more knowledge than I have is willing to pay some serious cash for our interest. I think they would get a great return on their offer.
We got the same offer. It does make me excited!
Wendy1, have you been past the Trudy well site recently? Just wondering if they have completed the second set of (5?) wells in the second unit. I haven’t seen any info on the OCD weekly well reporting site. They must be getting close to bringing all the wells online unless they hit a snag.
I was told they weren’t going to drill those right now. If they did, they said it would be a few years. Who knows…
Applications in New Mexico to drill are granted for two years with a two year extension probability. Thought you’d like me to divulge that information. Hope its useful.
That would be awesome Rick5. I’m just going by what the landman said.
They already are on the extension years aren’t they? I think they extended them in December of 2022. I could certainly be wrong since this is my first rodeo.
I think most were initially approved in Fall 2022. So should expire in 2024 and can extend to 2026.
I have yet to see Spur come back and drill more than their initial batch of wells anywhere though. It might happen on a forever timeline, but they have a lot of acreage with no wells that needs to get developed first.
In my three half mile wide units they have drilled 13 wells, and didn’t drill 13 other permitted wells within the 4 year window (permit + extension). Just to set expectations.
Yeah, the landman was pretty sure it would be just the 4 wells.
I am new at this but I did cover some oil service companies way back and learned a few things. Spur must be spreading the drilling dollars around so they can get some production in a lot of leases before they expire. That way they can be “held by production.” They don’t want the leases to expire. It seems a lot of companies think the oil price is too low to go whole hog on drilling now. But they can go back and drill the other wells when the price is higher. What I don’t understand is why they would apply for a bunch of wells they don’t really plan to drill in the next 2-4 years.
Easy peezy. What was the price of oil & nat gas 2 years ago? Now, based on that, what will the price be in 2024 & beyond?
It takes a long time (relatively speaking) to get Federal permits. So oftentimes people will ask for more of them than they will want in their baseline development case. Just in case oil is $200 and they want to drill a few more wells, or if they think the White House is going to stop issuing permits etc. Or if they want to sell their position to somebody else.
Getting a federal permit is mostly a surface issue. So a giant pad with 9 wells is really about the same headache as pad with 4-5 wells, so it’s not really any more work for you (or the govt) to apply for the 9 wells in stead of the 4-5. It does cost more in permit fees though. But gives you options.
And yes, the whole game for Spur is to hold the acreage. And drill profitable wells. So you put as many wells as are slam dunks in a unit and then move on to another unit. Which means 4-5 wells per half mile.
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