Replies to This Discussion

Permalink Reply by Mark on February 18, 2015 at 6:39pm

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.

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Permalink Reply by Mark on February 19, 2015 at 1:31am

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.

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Permalink Reply by Susie Kief on February 19, 2015 at 5:48am

What if there are hedges in place?

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Permalink Reply by Hale Yayuh on February 19, 2015 at 8:03am

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.

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Permalink Reply by Mark on February 19, 2015 at 10:35am

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.

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Permalink Reply by Not Mark P. on February 19, 2015 at 7:46am

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.

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Permalink Reply by LR on February 19, 2015 at 8:42am

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

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Permalink Reply by Mike Chandler on February 19, 2015 at 11:41am

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

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Permalink Reply by Susie Kief on February 24, 2015 at 2:19pm

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

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Permalink Reply by Mike Chandler on February 24, 2015 at 2:53pm

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!

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Permalink Reply by Susie Kief on February 24, 2015 at 3:02pm

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

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Permalink Reply by Susie Kief on February 24, 2015 at 3:09pm

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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