Monday, May 12, 2014

Number Of Active Rigs In North Dakota Continues To Inch Up; Eagle Ford EURs For Current Wells At 168,000 -- EIA


May 12, 2014: with regard to the EIA estimate of Eagle Ford wells to be 168,000 bbls. This is really a good example of how one can lie / mislead with statistics.  The analyst took all wells from the very beginning of the Eagle Ford, all the way back to 2008, and then forward to 2013 (at least with 4 months of production).

Folks need to remember two things when a new formation is discovered: a) it takes time to figure out how to develop the field; complete the wells; etc; and, b) it takes time to delineate the new basin. In fact, EOG says it has not even definitively delineated the Bakken as to density of wells yet, and EOG has been drilling in the Bakken since at least 2007. The wells drilled in 2007 in the Bakken were certainly not as good as the wells they are drilling in 2014. Two things: first, they are still trying to figure out the best completion/fracking methods; and, second, for the next few years, operators will be concentrating on the sweet spots, drilling where they should get the best wells.

If the first Eagle Ford wells are averaging 168,000 bbls, one can only imagine how good Eagle Ford wells will be five years from now.

If one wants to see some miserable wells in the Bakken, look at the history of Bakken wells in 2006.
Original Post
A reader alerted me to this. It will be interesting to see how this plays out: the EIA estimates the average Eagle Ford well at 168,000 bbl, for the wells drilled 2008 - 2013. Why is this important? It affects policy planners and banks' eagerness to lend.
Van Wagener calculated the Eagle Ford per-well average EUR from 5,384 wells. That group came from a database of 6,594 wells, from which the analyst excluded 927 with less than 4 months of production data and 283 for which monthly production wasn’t successfully fitted to a hyperbolic decline curve.
Seven counties in the Eagle Ford play had more than 400 oil and natural gas wells at the time of the analysis. Among those, DeWitt County had the highest mean EUR per well, 334,000 bbl among 453 wells, followed by Karnes County with 226,000 bbl among 975 wells. Other mean per-well EURs and well totals were Gonazales County, 198,000 bbl, 486 wells; LaSalle County, 153,000 bbl, 755 wells; Dimmit County, 137,000 bbl, 820 wells; McMullen County, 127,000 bbl, 455 wells; and Webb County, 80,000 bbl, 593 wells.
AFP/Yahoo!News is reporting: Russia could cut off natural gas to the Ukraine as of June 3. The move would impact 13 EU nations. At some point Germany (and the Germans) are going to get tired of paying the bills for the rest of the EU. I assume President Obama is going golfing.
Gazprom chief executive Alexei Miller said Ukraine must pay upfront for its June deliveries because of outstanding debts. He added that Kiev had until the morning of June 3 to make the payment "or Ukraine will receive zero cubic metres (of gas) in June," Interfax reported.
Active rigs:

Active Rigs193185209175114

RBN Energy: Large-scale ethane exports could ruin a good thing.
Hmm, all that would make the economics of producing ethylene from ethane a little different from today’s ethane price of about 30 c/gal.  Of course, we are not saying this is going to happen.  But based on our analysis it seems like a possibility.  It would not be the first time petrochemical buyers overbuilt capacity and killed the goose laying the golden egg.
The Wall Street Journal

The ante has been raised: pro-Russian separatists in eastern Ukraine have declared victory. I assume President Obama will draw another line in the Black Sea.

US firms pack up for tax benefits. I think US firms have been more than patient working with Congress trying to get the tax breaks to even the playing field; but if those tax breaks are not forthcoming, US firms are going. Overseas. Great for investors.

Back to square 1? Not it's back to net neutrality?

Fox changing the way it does business. Finally.

The Tao of Gregg Popovich. A fairly lightweight article by WSJ standards, but nice nonetheless.

This is interesting. US pension funds face record amounts of capital flowing back from private-equity investments that is upsetting the careful portfolio balance these funds maintain to achieve steady returns over decades to pay thousands of retirees. 
U.S. pension funds face a dilemma that might be considered a nice problem to have: record amounts of capital flowing back from private-equity investments.
Strong markets have given the private-equity firms backed by pension money the ability to sell companies, which generates cash for investors.
These funds last year returned $134.6 billion to pension funds and other investors, according to Cambridge Associates LLC, topping 2012's record of $115 billion. But all that cash coming back from private-equity investments is upsetting the careful balance of investments that pension funds must maintain to achieve steady returns over decades to pay thousands of retirees.
 The Los Angeles Times

100-degree heat wave to hit southern California.

California puts $750 million in tax credits into retaining corporations now that they've lost both Toyota and OXY Petroleum. Someone pointed out that "maybe taxes do matter." When one looks at the incentives to get the $750 million, one will see they are so restrictive; DOA.

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