So we have been lucky to have a number of wells on our property over the last 15 years and we just received notice that our oil company wants to designate our Ist well (TD 10/2009) a stripper well. Any thoughts? Good or bad? It is one of the wells that has been chugging along at 500 to 700 bbls per month for the last 6 years. Thanks for your thoughts.
Any thoughts? Good or bad? Good or bad for whom? Three players: the taxing agency (state, Feds), the operator, the mineral owners. Good or bad for none, one, two, or all three? Answer: good for all three. Years ago I wanted to address this issue (stripper wells) on the blog but I have purposely not posted my thoughts. And won't start now..
I doubt a 500+ bbl/m would be designated a stripper. Has to be (I think) somewhere south of 400 bbl/mo. We've actually had several such designations. Result? Usually an infill well or two, using more modern technologies, and guess what. More cash flow to the royalty recipients! Is this a great country or what?
Remember, "back in the day" a well was projected to produce around 300M bbl over its 20 year life expectancy. Now, many produce that much in under two years. So, the operator has already recouped/written off the cost of the original well(s). Continuing a stripper is marginally profitable at best. We recently had three wells, each producing over 800 bbl/mo shut down and abandoned, only to be replaced by infill wells. Interesting stuff, eh?
So we have been lucky to have a number of wells on our property over the last 15 years and we just received notice that our oil company wants to designate our Ist well (TD 10/2009) a stripper well. Any thoughts? Good or bad? It is one of the wells that has been chugging along at 500 to 700 bbls per month for the last 6 years.
ReplyDeleteThanks for your thoughts.
Any thoughts? Good or bad? Good or bad for whom? Three players: the taxing agency (state, Feds), the operator, the mineral owners. Good or bad for none, one, two, or all three? Answer: good for all three. Years ago I wanted to address this issue (stripper wells) on the blog but I have purposely not posted my thoughts. And won't start now..
DeleteI doubt a 500+ bbl/m would be designated a stripper. Has to be (I think) somewhere south of 400 bbl/mo. We've actually had several such designations. Result? Usually an infill well or two, using more modern technologies, and guess what. More cash flow to the royalty recipients! Is this a great country or what?
ReplyDeleteRemember, "back in the day" a well was projected to produce around 300M bbl over its 20 year life expectancy. Now, many produce that much in under two years. So, the operator has already recouped/written off the cost of the original well(s). Continuing a stripper is marginally profitable at best. We recently had three wells, each producing over 800 bbl/mo shut down and abandoned, only to be replaced by infill wells. Interesting stuff, eh?
ReplyDelete