Best Quarter we have had in a long time.
Stacked play could be a game changer.
Higher Oil Cut.
Lower Well Costs
Lower G&A going forward.
Trusts getting retired - Bennett actually said something about it, hopefully we get more info on ROR impact in CC.
GOM doing very well. Actually drilled a new well there, I think that is a first, if I recall correctly in the past it has been strictly recompletions. GOM wells are risky, but if they hit, they often hit big. Still awaiting completion results.
On the negative side WTO production is pathetic, Century Plant penalties will continue to mount if a deal isn't worked out with OXY.
Lots more positives than negatives. SD is on the right track. We need a good revised type curve and a move in NG pricing and the stock will soar - probably commences Q1 2014, but it would not surprise me to see a slow build in the mean time. If I were short I would exit.
The stacked play is what really has my interest. It opens up multitudes of possibilities. SD could sell top acreage, develop the middle or lower portions, or any version in between. Remember that we sold some of the deeper Permian acreage at a nice profit and it was a relatively small amount of acreage. This is a new asset, something that none of us was planning on or had foreseen. It's the best news we have seen in a long time. However, its early in its development, analysis and evaluation.
SDR drilling obligations will be closed out by EOY, PER likely by Q1 2014, SDT already closed out. NG prices likely to move substantially 2014 forward. No debt due until 2020. Liquidity situation in good shape. GOM appearing to be good, potentially quite good. Stacked play a huge potential asset that has yet to be booked.
If Oil or NG pricing collapses we could still have a rough ride. Otherwise I see no downside.
The Short's Stack of Chips is going to get wiped off the table! The Longs have a Multi-Stacked Chip build in play: the game has changed.
Hoppe & JJ, just look up some of my recent posts (and others) and you will see the logic. We really don't need supply to decline, demand will increase and get NG back close to parity with oil on a BTU coefficient pricing basis less LNG liquification and transport costs - $5.50 plus area at present.
Also Hoppe, NG is not capped at $4.00, its already moved above that level this year, and SD has good volume hedged above $4.00. There is no indication that supply is building, most indicators are flat to a slight decline, and more wells are being completed and hooked up in the Marcellus than currently being drilled - at least as far as the largest driller in the play (CHK) is concerned - and that is confirmed info via CHK 2Q report.
Thanks for all your research. Am I correct in interpreting you post that SD could sell drilling rights to companies at various geological levels....So that it could lease a level and then lease or drill another level on the same acre? Also, seems intuitive to me that if they can use Stacked drilling the average cost per well to drill (when this occurs) should go down significantly. Am I correct? Good luck
Yes, SD can sell off drilling rights to any depth or interval, or production on any properties they own.
I'll let some of the guys that have experience with drilling the wells comment about completing multi-stacked plays on horizontals simultaneously at different depth levels. I'm not an expert on drilling. Generally speaking, you go for the most productive zone. From what I understand its expensive to drill laterally in various different zones. You have to trip the pipe, replace drill bits, frac the various intervals. Also there could be bleed or travel from surrounding zones if they are too close vertically and completed at the same time. Once again I'm not an expert on this, and it will likely need to be tested in the field. I think Nikonikos and Elvis know a lot more about drilling than I do maybe they will comment or some other guys that have experience - its emerging technology.
Key here is that SD appears to have found an even sweeter spot in the Miss level than what they were originally drilling for. They could drill one level, backup or go deeper later on if they are in close proximity and would bleed if simultaneously producing at the same time. It could potentially triple the number of wells that they could drill. There needs to be a fairly significant interval vertical distance between the levels that are completed horizontally in order for producing from different levels not to interfere with each other. Once pressure and production decreases from the initial target zone, a different vertical level can be completed if its within proximity of the original level that was completed. Porosity and permiability of the character of the rock come into as play as well as certain natural frack lines that may extend vertically that could cause some interference. SD has hundreds of Geologists and Engineers that are studying this. Maybe one of them will post on this or somebody else that is actively drilling the play.
Yes this was a good quarter rainbow, your research and knowledge is invaluable to us on these boards. The stacked play highlight is indeed a possible game changer; I wonder how many questions the analysts will raise about this development during tomorrows conference call.