Five Years Ago: Natural Gas Priced At $2.50; Today, Trending Toward $10 -- Changes Everything -- August 17, 2022

Midland: part of the Permian is tracked at the sidebar at the right. 

NOG:

• link here, press release; 
• Midland Basin
  
• $110 million
• 1,600 net acres in Howard County, TX
  
• Priced at high end.
• $68,000 / net acre.
• $61,000 / flowing boepd.
• from below:  
• a gas price assumption of $2.50/MMbtu was used in this analysis. 
• the Big Star wells fall in acreage that is very favorable and breaks even below $30-$35 per barrel. In addition, the most recent Callon investor presentation shows that the active Big Star wells average 30-day IP rates of over 1,000 Boe/d, with well costs of $6 MM for 9,000’ laterals. 

From April 22, 2016:  

Earlier this week (back in April, 2016), Callon Petroleum bought assets from Big Star Oil and Gas in the Central Permian Basin and nearly doubled their total acreage in the region. 

The majority of the purchase is located in Howard County, which has been an increasingly popular growth area. This is the sixth acquisition in the last year-and-a-half in Howard County, with major purchases from Diamondback, Encana, and Moss Creek among others. The neighboring counties of the Midland Basin (Martin, Glasscock, Andrews, and Midland) have historically been more active, but encouraging results in Howard County have caused many to call this a possible new “core” area for development. Analysis on the recent well characteristics tells part of the story for this recent interest.

Over the past three years, the 30-day maximum IP rates have more than doubled in Howard County, reaching levels competitive with the very active Midland County acreage and attracting significant amounts of capital investment, even in the current low oil price environment.

Taking a closer look at the Big Star wells currently in operation, we can get an idea of how Callon’s newest acquisition compares to the county averages. 

Using BTU Analytics’ in-house economics model and individual well based data. A gas price assumption of $2.50/MMbtu was used in this analysis. The Big Star wells fall in acreage that is very favorable and breaks even below $30-$35 per barrel. In addition, the most recent Callon investor presentation shows that the active Big Star wells average 30-day IP rates of over 1,000 Boe/d, with well costs of $6 MM for 9,000’ laterals. These numbers put the Big Star wells toward the top of list of current operators.