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Linn Energy, LLC (LINE) Message Board

  • rlp2451 rlp2451 Feb 4, 2013 2:39 PM Flag

    OT: Utica Update - Wells with 3MM EUR

    Leaving Bakken wells wayyy behind!

    Although Gulfport has not released well depletion rates yet, SunTrust said it was “confident they are around 63% for the first year. Our depletion estimates help generate an EUR of ~3 MMBOE versus a ~1 MMBOE Street estimate.”

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    • MHR CEO today also confirmed their UTICA wells have an EUR between 1.5 and 3MM BOE.

      How many years will they be there? Long after Bakken plays out with only 700M EUR of CLRs wells in Three Forks plays (according to the recent SA article from Zeits). How about FOUR TIMES as long?

      • 2 Replies to rlp2451
      • Do you still think he is correct?

        ["MHR CEO today also confirmed their UTICA wells have an EUR between 1.5 and 3MM BOE.
        How many years will they be there? Long after Bakken plays out with only 700M EUR of CLRs wells in Three Forks plays (according to the recent SA article from Zeits). How about FOUR TIMES as long?"]

        Well, I don't know?

        Since Ohio's report that 87 Utica wells (in 2012) produced an average TOTAL of 1750 Bbls of OIL/day,
        I wonder if that EUR estimate might change any or if maybe the 2013 numbers will be a bit different?

        I do think the Marcellus & the Utica are good areas....but, I still like North Dakota, Texas, and a few other areas.......better.

      • Sure.

        Please post the title of the Zeits article so we can check to see what it says....because based on you past posts and just making up things....I always like to check....

        All I see from Richard Zeits that are relevant & recent are these:

        "Chesapeake Sells Marcellus Acreage To Southwestern At $574 Per Acre: Quick Read"

        and,

        "Bakken: 'Deep' Revolution Underway - Everything Investors Need To Know"

        And,
        why are all those law firms listed under the MHR main-page at yahoo for Shareholder Litigation.....any reason that you know of and can share?

        You may not be surprised for me to be a little skeptical about your bakken related posts...since you seem to post only negative slanted bakken-posts.

    • So then why are most headed for and moving into the bakken?

      OAS is also one of the several operating partners for LINE in North Dakota.

      It looks like TPLM & OAS are both operating partners for Encore Energy Partners Operating, LLC (“Encore”) in the Williston basin.

      See below:

      On March 1, 2012, Encore Energy Partners Operating, LLC (“Encore”), a wholly owned subsidiary of Vanguard, entered into a Joint Operating Agreement with Oasis Petroleum North America, LLC (“Oasis), covering a 1280 acre drilling and spacing unit (“DSU”) in the Bakken play in Williams County, North Dakota. The transaction contemplates Oasis, a prominent Bakken operator, to commence the drilling of the Shepherd 5501 12-5H well prior to July 1, 2012, with Encore selling an Assignment of 50% of its held by production leasehold to Oasis for an aggregate sales price of approximately $1.0 million and participating in the drilling of the Shepherd well with a 25% working interest and a 23.25% net revenue interest. Proceeds from the sale of the leasehold interest to Oasis will fund approximately 40% of Encore’s costs attributable to its 25% working interest. This Middle Bakken test well spudded on April 20, 2012 and will have an approximate 10,000’ lateral length and is offsetting several prolific Bakken producers operated by Oasis.

      On March 30, 2012, Encore entered into a Participation Agreement and Joint Operating Agreement with Triangle USA Petroleum Corporation, (“Triangle”), that provides for the joint development of four 1280 acre DSU’s in the highly successful Bakken drilling area in the northern portion of McKenzie County, North Dakota. Triangle, as operator of the joint venture, will commence the first Bakken long lateral test on or before September 1, 2012 and thereafter will drill subsequent wells every 150 days. In March 2012, Encore sold an assignment of approximately 50% of its leasehold interest to Triangle for an aggregate sales price of $4.4 million, retaining the remaining 50% working interest and will participate in the drilling and completion costs of the first four Bakken tests with an average working interest per well of approximately 20% and associated net revenue interest of 17.75%. Pending successful results of the initial test in each of the four DSU’s, infill drilling of additional wells is planned.

    • This is another good example of why we seem to disagree often...you do not tell the whole story and hide parts of the article so a reader has to go look for themselves to find out what was really reported....

      You post the parts that you like and not other important parts......right?

      For example...did you not like the parts about what Netherland Sewell EUR estimates?

      "SunTrust Robinson Humphrey Inc. – the full-service corporate and investment banking arm of SunTrust Bank Inc. – reported Jan. 25 that, after spending four days in the Utica shale play, its confidence in much of the play has increased, based on continued high initial production rates, limited expected depletion, improved spacing, and declining wells costs. To SunTrust, the companies appearing best-positioned are Gulfport Energy (GPOR, $41.71, Buy), PDC Energy (PDCE, $36.97, Buy), Magnum Hunter (MHR, $4.17, Buy), and Rex Energy (REXX, $13.70, Buy).

      SunTrust’s report said that, when trying to define the best parts of the Utica, it determined that the two keys are depletion rates and commodity mix. The ultimate well, the company said, would be nearly all oil with a very gradual production decline. SunTrust stated that its due diligence in the Utica confirmed that the play has higher liquids going from east to west, and that the depletion rate seemed to be better in the east. Thus, it said, the best wells appeared likely to be on the Guernsey/Belmont counties border and the Noble/Monroe counties border.

      SunTrust noted that, according to numerous operators and other Utica experts, although depletion may be initially high for a couple of weeks, the decline stabilizes soon after. Therefore, SunTrust said that it will continue to estimate a first-year decline of approximately 63%.

      The report also stated that estimated ultimate recovery (EUR) estimates are increasing. SunTrust said that recent Netherland Sewell EUR estimates are approximately 1.2 MMBOE for a wet gas type well and approximately 1.7 MMBOE for a dry gas type well. However, SunTrust’s EUR estimates remain at approximately 3 MMBOE, with the primary difference being its assumed first-year depletion, whereby SunTrust calculates a decline rate of 63% versus the Street at ~80%. As a result of SunTrust’s lower estimate of depletion, it derives an IRR of 224%, which is much higher than the Street forecast of ~50% – although, the report said, there is very limited historical Utica well data, so time would determine which estimate was closer.

      SunTrust also said that tighter spacing was leading to increased Utica drilling locations, noting that the Ohio Department of Natural Resources Technical Advisory Committee has approved 225-foot horizontal spacing for one operator. As such, companies are beginning to test various spacing lengths. Although early, down to 40-acre spacing is possible, in SunTrust’s view, which could quadruple the number of estimated drilling sites that most companies in the play are currently expecting.

      SunTrust also said it believes that Utica well costs are beginning to decline. Although the average Utica well cost remains over $10 million, SunTrust noted that there is evidence that costs could fall soon. Operators highlighted pad drilling, improved drilling and completion times, and lower supply costs as a few reasons why costs have begun to drop. SunTrust estimates that the average Utica well with a 6,000-foot lateral will cost around $8.5 million this year.

      The report said that Utica infrastructure is still a bottleneck, but progress is noticeable. Additionally, while regional processing and pipelines continue to be a problem, infrastructure construction has increased considerably. Markwest Energy Partners (MWE, $53.66, NR) highlighted its numerous projects at SunTrust’s recent Utica conference."

 
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