It probably was an expensive well. The operators all say they are bringing prices of completed wells down, to the neighborhood of $7 - $8 million but I don't put much faith in those estimates. The biggest problem is figuring out what is being paid for; too many things that can be hidden in numbers like that. I think we will continue to see "cost containment" in the corporate presentations, but with a) huge proppant volume; and, b) slickwater adding 35% to the average EUR in the Basin, I think the emphasis is going to be on raising EURs this year and next (despite the cost) and then get back to trying to contain costs. Operators will see savings in pad drilling and leasing costs, offsetting completing/fracking costs.I wrote that on September 18, 2014. Tonight, while reviewing the most recent CLR presentation, my thoughts were confirmed. Slide #50 of the presentation shows the cost of completed CLR wells. Between 2012 and early 2014, operators were talking about decreasing the cost of completed wells. CLR was reporting the following:
- 2012: $9.2 million
- 2013: $8.0 million
- 1H14: $7.8 million
- But then, starting earlier this year, the price of completed CLR wells increased from $7.8 million to $10 million, due to higher proppant volumes and slickwater.
Whiting has differentiated itself in the Bakken as the "low cost operator' in its corporate presentations. It will be interesting to see if that continues to be a bullet in their presentations once they acquire KOG, with their very expensive wells.
Listened to Floyd Wilson most recent presentation and he mentioned the cost to frac is being quoted at up to 225K per stage !!! 22 stages is almost 5,000,000 the drilling costs have come way down its the completion side that is raising the costs.
ReplyDeleteYes, and I think the day of 22 stages is pretty much over (except where geologically it makes sense). The norm is now easily 24 stages, 30 stages, and getting higher.
DeleteFor newbies, I believe the rule of thumb in the 'old days' was $100K per stage. With the shortage of frack sand and the shortage of rail cars to carry frack sand, I can believe the cost of fracking has doubled +. Thank you for the update.
By the way, I have to go back and look but I think it takes a unit train (100 cars) of frack sand to frack one Bakken well. Again, I could be wrong on that but I think I posted that sometime ago after doing the calculations.
Slickwater fluid systems do not cost more than Gel fluid systems. The cost of Gel, and the other 4 or 5 Chemicals used to create a crosslinked Gel Fluid, is much more expensive then simply running Friction Reducer, Bio & Clay Treat chemicals in a Slickwater Fluid system. Some of these companies must be embedding proppant costs into their fluid systems. why they feel the need to do this, is the million dollars per well question. I have been informed that our transportation, demerge, dust control and location cleanup costs on proppant are where we are looking to reduce in order to maintain the profitability that our investors desire. This is what I am seeing in the DJ Basin.
ReplyDeleteWow, I appreciate that.
DeleteI posted the other day that I don't put much stock / I don't put much faith into what corporate presentations say their completed wells cost. I said there it was impossible to know the operators were including in their costs. When saying a completed well costs $10 million, there's just too many variables to consider, and too much opportunity for shenanigans, as it were.
I post what operators are saying, and I link the sources (generally). For me, the figures are only a ball-park number. Compounding the problem, is comparing the cost of wells targeting different formations (Bakken, Spearfish, Madison) and then comparing the cost of wells in various parts of the Williston Basin, even the same formation.
Very nice comment; thank you for taking the time to write.
I thought the cost was in the higher horsepower for the pumping.
ReplyDelete"Everything" costs more but I do think the most costly line item is proppant. I got a cryptic comment the other day on the costs of services for fracking by Halliburton.
DeleteYou can look at the CLR charts and see slickwater and proppant disaggregated. I think the slickwater (as practiced) has higher costs because of pumping harder.
DeleteIt would be nice if RBN Energy or Mike Filloon posted an analysis.
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