Carizzo is putting in our well (La Salle County).  They are spending a boatload of money on this well.  What is the likelihood that they will frack it?  I'm a novice so I hope I've got the right terminology!

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IMO, odds are if they drill it they will frac it.

Of course, if oil prices drop $10-$20 in the short term, frac may be delayed.

After reading EOG's press release today, I have to say the odds of an operator drilling a well and then deferring its frac'ing until oil prices rise is a very real possibility. EOG is planning to do this in some areas and other operators may follow suit.

Of course, higher prices mean more royalty dollars so the wait will be worth it.

What if there are hedges in place?

It depends on the operator and how desperate they are for cash in this crash environment. As for hedging, I am no expert on hedging but I don't think hedges are locale specific... I don't think they hedge on any particular well or field... they buy hedge positions in general for crude oil.

EOG announced yesterday that are taking a pretty aggressive approach to NOT completing wells awaiting a frac. I hope other large operators will make a similar announcement and then stick to it. If these companies could hold off just 6-10 months, it might make a dramatic difference in overall supply, which should bolster prices.

Also need to remember that hedges are not perpetual - they do expire after a certain time period and then new hedges (based on new prices) are set. Very complicated process as you can imagine. I believe that many of the hedges presently in place expire around mid 2015. The next set will have much lower numbers associated with them.

Mark:

Of the $8 million or so cost of drilling, frac'ing, and bringing to production a horizontal well in the EFS, what would you surmise to be the costs associated with frac'ing?  It is funny that I used to peruse the RRC's W-1 search in hopes that a lease in which I hold mineral rights would be in the process of being permitted for a new well.  Now I hope that there are not any permits on these leases (at least for now).

Not Mark P.

The wells in Dimmit Co. that I'm familiar with cost around 2 mil to drill and another 4 1/2 mil to frac. These wells are in the 7,000 ft TVD area. Operator is starting the drilling of 19 wells. Hope they wait for 6 - 12  months to frac but I have no control -  just along for the ride.

LR

EOG's hedges only cover a small fraction of their daily production.

When and how will I know if Carizzo will frac our well?  The oilman says he doesn't know.

Susie,
It will be a waiting game as far as finding out that a frac has been completed. Best source of early info would be from your guy in the field. Otherwise, you have to watch TxRRC for completions and that info is usually a month after the frac and initial testing.
If the well is drilled to TD and the casing is run, you can pretty much bet that the well will get frac'd...eventually.
Good luck!

How do I find it on TxRRC?  I looked but don't know how to look it up.

The lease says this is a 402.5 acre tract of land out of the TWNGRR Survey No. 669, A-826; the I&GNRR Survey No. 162, A-1023; the M.M. Lane Survey 39, A-1252; the J. Poitevent Survey 39, A-631 and the James Howell Survey 672, A-1202. It's the David Anderson Unit B I believe but I'm not positive.

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