Some Back-Of-The-Envelope Calculation Exercises To Consider

If you have a couple of envelopes, and if you are interested in doing some back-of-the envelope calculations, this might entertain you for about 20 minutes.

Look at the deals recently posted.

First, the American Eagle / Resource Energy Can-Am, $36 million deal for assets in Divide County, North Dakota. Some data points:

• the EURs in Divide County are probably significantly less than in the best spots in the Bakken
• Bakken wells have a steep decline rate
• supposedly there were 87 wells in the deal
• the NDIC provided the file numbers for each well, so it's possible to see the status of the wells

I've done those calculations and the results are staggering. I may post those numbers later, but I don't want to take the fun out of it for those who want to give it a go.

Second, the Energy 11 LP / Whiting deal, also at the same link. In addition to the data points at the link, consider:

• the Sanish oil field is one of the premier oil fields in the Bakken
• you can disagree with me and Filloon, but I think the EURs in the Sanish wells are around one million bbls boe
• slightly less than half the wells in the deal are already producing
• slightly more than half the wells are yet to be drilled
• the decline rates in the Bakken are steep 

I've done those calculations and the results are staggering. I may post those numbers later, but I don't want to take the fun out of it for those who want to give it a go.

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Speaking Of Exercises -- A Note to the Granddaughters

Wow. Writing about those back-of-the-envelope exercises, reminds me of "P-chem" or physical chemistry in my third or fourth year of college. Holy mackerel that was a hard course. I had an incredibly good professor. He later went on to teach or facilitate seminars in theology. But back to "P-chem."

I remember vividly our mid-term exam. There were four questions. We were given the exam prior to our long Thanksgiving vacation -- four or five days -- and it was due when we returned. I carried the exam with me and hitchhiked to my grandparents' home about 150 miles distant, from Sioux Falls, SD, to Storm Lake, IA. If I recall correctly, a friend gave me a ride about halfway but from there I was on my own. I do not recall the trip back to school, but it was obviously all hitchhiking. I did keep a journal at the time; maybe I can look that up sometime.

Whatever.

All I remember is spending four days at my grandparents' home in Storm Lake working out those problems. The final product looked pretty impressive, certainly as good as anything Sheldon puts on his white boards on "Big Bang Theory."

But as good as the "final product" looked, I can honestly say I had no idea what I was doing. Sort of like my blogging about the Bakken. LOL. But I just put down the data points given and started moving from one step to the next.

My professor was very lenient in grading. I think he graded us on effort, certainly not on results. LOL.

Ah, yes, the good ol' days.

By the way, the reason I went to my grandmother's house over Thanksgiving was that it was relatively close and it would be very, very quiet. She lived alone and pretty much left me to myself.