I have offers from two landmen to lease my minerals in Reeves Co. One plans to drill horizontally and the other vertically and later horizontally. At least that's what they tell me. There is a producing horizontal well near me. Is one inherently preferable to the other?
We have both on the same property and the horizontal, while costing much, much more yields way, way more barrels
Jan,
You definitely want a horizontal well. The frack/perforations of a horizontal will cover much more of the targeted formation than a vertical well. Will this company state that in their lease that they are definitely going Horizontal? Drill Baby Drill
Clint Liles
Thanks, Clint. That is a good question for me to ask. I knew the horizontal yielded more, but didn't know if was common practice to drill vertical first. I also wondered if lower cost meant the company planning vertical might be more likely to drill.
"I also wondered if lower cost meant the company planning vertical might be more likely to drill?"
Jan, that's another good question to ask them.
Clint Liles
I'm sure you realize, but letting anything a landman tells you influence your decision can be a big mistake. If these folks will include a firm "drilling commitment" in the lease then...assuming you know who these landmen are representing....you can decide which company has the track record that indicates they can follow through with what they are offering. Drilling commitments are hard to come by so negotiating the shortest possible lease term may be the best alternative. Keep in mind also that horizontal wells typically produce more than vertical but a lot of other variables can come into play. The size unit that's formed (horizontals typically having much larger units than verticals) and the number of your acres that get included in the unit could offset the difference between a horizontal and a vertical well.
Thanks, Dusty. Good advice.
Dusty said:
I'm sure you realize, but letting anything a landman tells you influence your decision can be a big mistake. If these folks will include a firm "drilling commitment" in the lease then...assuming you know who these landmen are representing....you can decide which company has the track record that indicates they can follow through with what they are offering. Drilling commitments are hard to come by so negotiating the shortest possible lease term may be the best alternative. Keep in mind also that horizontal wells typically produce more than vertical but a lot of other variables can come into play. The size unit that's formed (horizontals typically having much larger units than verticals) and the number of your acres that get included in the unit could offset the difference between a horizontal and a vertical well.
Depending on how many acres you have, some companies come in and drill a vertical well first to gather geological information and act as an observation well before they drill the horizontals. Economically for you, the horizontal is usually better because it produces more, but it ties up more acreage, if your lease has the right language in it.
Thanks so much, Wade.
Wade Caldwell said:
Depending on how many acres you have, some companies come in and drill a vertical well first to gather geological information and act as an observation well before they drill the horizontals.
Economically for you, the horizontal is usually better because it produces more, but it ties up more acreage, if your lease has the right language in it.
Jan:
I just saw your note about the offers to lease. Which part of the county are you in? I am curious about activity there.
I am in section 1 Block 6.
BMP said:
Jan:
I just saw your note about the offers to lease. Which part of the county are you in? I am curious about activity there.