[rockdoc123]

$this->bbcode_second_pass_quote('', 't')ell you what, Doc; why don't you explain to DC the accounting/reporting path for oil and natural gas production in Texas, who knows what first, the TRRC or the EIA or the SEC or the FBI. And while you are at it, draw me a picture, one of them flow charts with the little squares in it, in crayon, so I can understand it. Not too complicated now, you know how dumb I B bout them high dolla public companies.

[Oily Stuff]

Thank you, DC. I have learned something. Respectfully, however, EIA-813 appears to be more directed at pipeline/storage facilities, blending tank farms, and storage facilities used in SPR inventory accounting than it is directed at individual producers operating in Eagle Ford shale fields in S. Texas. For instance the minimum amount of crude oil on hand at a "facility" must be 1000 bbls. and I can assure you that very few operators are holding that many barrels on an individual lease as that creates operational headaches given the high volume of daily production, limited storage capacity and problems associated with separation and treatment of BS&W prior to oil sales and water disposal. That oil is getting moved off lease as fast as possible. Please see 813, Part 6.

I believed, perhaps incorrectly, that you were attempting to study individual well performance in the Eagle Ford and how that translates to predicting the future of the play relative to America's energy plight. I think the data that can be gleaned from 813 does not identify Eagle Ford shale production from Yates
Field production, correct me if I am wrong. Nor does the data from that EIA data give us any insight into individual lease and well performance in the Eagle Ford or any other field. Please see 813, Part 3. If you are using EIA data and assuming that all production increases in Texas held in storage, put in a salt cavern, or run down a pipeline is Eagle Ford shale production, respectfully, that may not be true.

The Texas Railroad Commission unloads untold regulatory grief on me every day. It is not without it's problems, the TRRC, and I know first hand it is overwhelmed at the moment from these shale plays and from operators who intentionally or incorrectly misreport and delay reporting in the shale plays. But I am a proud Texan and from a keen knowledge on the history of the TRRC and how it essentially taught the rest of the world how to regulate its oil and gas business, I believe that the only way to evaluate actual tight oil leases and well performance is by using TRRC data, even if it means having to wait a few months for them to get things sorted out. Ultimately the TRRC does get it sorted out, down to the last barrel, per lease, per field, per reservoir.

When that barrel of oil leaves a Texas lease, it is accounted for and that becomes real data. If for instance I am mapping around looking for a prospect to drill, evaluation well performance and/or reservoir decline and remaining OOIP, I use TRRC data, not EIA or SEC data. I can only give you the benefit of my actual experiences and the ability, or inability to feed my family.

Thanks again for your good work, mate.

[dcoyne78]

$this->bbcode_second_pass_quote('ROCKMAN', 'D')C – This makes more sense. The filters on DrillingInfo are clumsy with respect to identifying what wells are producing at a single point in time. But this is what I’ve figured out: During May 2012 there were 1869 EFS wells classified as oil and 430 classified as gas/condensate. The numbers I gave you for May 2013 would represent those wells plus the ones added since May 2012 and those that have stopped producing since then.

[ROCKMAN]

DC - where does your data come from? According to DrillingInfo, that gets it data from the TRRC, there were 2532 EFS leases producing in May 2013. Remember companies in Texas only report production by lease and not by well. The data base does show 4060 wells on those 2532 leases but that doesn't mean all those wells are producing in May. Two different leases may each have 5 wells that were completed in the EFS but one may have all five wells producing that month and the other only 2. A well that was completed in 2009 and abandoned in 2011 will still show up in the well count. The lease count may be lacking a few due to late reporting but it can't be erroneously high: no one accidentally reports a lease as producing if it isn't: if you report it as producing you'll report a volume produced and have to send a check to cover the state production tax. No one pays taxes they don't owe.

[Oily Stuff]

Rockdoc, please take note of the fact that I don't need to use the quote button to remind you what you just wrote and I address you by your username.

Where the production occurs at the facility is completely irrelevant to the debate regarding whose data to use to evaluate Eagle Ford production, as was the SEC BS. I was defending the accounting/reporting methods of the Texas Railroad Commission and attempting to understand from DC how he uses EIA data, instead of TRRC data, to evaluate Eagle Ford shale performance; I might ask you how that is "self serving" but I don't much care.

I work with public companies, done occasional deals with them, bought their production, drilled in between their abandoned wells and fixed their blowout messes. I can think outside the small, independent producer box, and the shale box, quite well, thank you. You seem single minded in your defense of public companies and can't get out of the box.

I was "snarky," yes sir. I am not as educated as you are but I have found my way thru the oilfield for over 60 years very well, am not retired and do the real work to make it happen every day. In other words I don't watch it being done, or read about it, or talk about it, I actually have to do it. I have had smart people look down their noses at me my entire career and lecture me, correct me and tell me it can be done the way I was doing it, that because of my lack of education they were smarter than me. I think you think that I am "obnoxious" because I am not overwhelmed with your public company box.

I will ignore the fact that you feel the need to call me names because I don't live in your box. I am not an engineer or a PhD but I do have good Texas manners.

[dcoyne78]

$this->bbcode_second_pass_quote('ROCKMAN', 'D')C - where does your data come from? According to DrillingInfo, that gets it data from the TRRC, there were 2532 EFS leases producing in May 2013. Remember companies in Texas only report production by lease and not by well. The data base does show 4060 wells on those 2532 leases but that doesn't mean all those wells are producing in May. Two different leases may each have 5 wells that were completed in the EFS but one may have all five wells producing that month and the other only 2. A well that was completed in 2009 and abandoned in 2011 will still show up in the well count. The lease count may be lacking a few due to late reporting but it can't be erroneously high: no one accidentally reports a lease as producing if it isn't: if you report it as producing you'll report a volume produced and have to send a check to cover the state production tax. No one pays taxes they don't owe.

[ROCKMAN]

DC - A pain in the ass with Texas reporting regs, eh? LOL. From first hand experience you can't assume equal production per well on a lease. I've seen wide variances for wells on the same lease from super good to money losing dogs.

I'm in DC right now on vacation. But I'll pull up the numbers for the 10 best single well leases for May producers and 10 doggie ones. I'll stick with wells that started producing May 2012 to avoid the learning curve effect. It won't be a great stat for the trend but it's something.

[ROCKMAN]

DC - Here are some for numbers for every to contemplate especially the optimists amongst us.

In May 2012: 235 leases began producing from the EFS. Of those leases 27 had been plugged and abandoned by May 2013. Of those abandoned leases the best production was 31k Bo and the worse was 3k Bo.

Just 101 lease had only one well on it. The ten best cumulative production for the wells beginning in May 2012 and still producing in May 2013: in k bo - 246; 234;210;206;202;193;183;181;178;177. The worse ten wells in that same period: in k bo - 11;11;12;14;16;17;19;19;25;29. And these are the weeks still producing. I'm pretty sure none of them will make 300k bo.

The pubcos, and others, like to point out those press releases about ther big wells. But did you see any news about those 27 leases that didn't produce for even 12 months before they were plugged and abandoned? How about those ten wells that are still producing in May 2013 but have only averaged about 15k bo for their first year? But I bet the folks that made those 200k+ bo wells the first 12 months have hit the PR trail big time. And thus the risk for anyone to trying to characterize any trend based upon just those pubco press releases. Not quit the whole story.

[ROCKMAN]

DC - Some more numbers to chew on. Many rate EOG as one of the best EFS players. So how did they do in May 2012? They put 46 wells on production that month. Only 4 were single well leases. For the first 12 those wells have produced 134k, 39k, 30k and 26k. All 46 of the wells that went on line in May 2012 they have averaged 88.7k bo for their first 12 months. Given the high initial decline rates it doesn't seem likely those wells will average 300k each over their life. Unless, of course, they can keep the producing for the next 50+years.

Again, interesting how the actual data doesn't quite match the hype, eh? Next I'll lifts up Chesapeake's skirt and check them out.

[Oily Stuff]

I can't wait to see under CHK's skirt.

I assume this production data that RM is kind enough to forward to us comes from DI, which in turn can only come directly from the Texas Railroad Commission.

[ROCKMAN]

DC - Same stats for Chesapeake: during May 2012 they put 16 wells on production. Only 5 were single well leases and during the first 12 months they produced 59k, 67k, 72k, 96k and 105k bbls of oil. During the first 12 months those 16 wells produced an average of 38.9k bbls of oil each.

Still haven't found a population of recent wells that look as though they'll average anywhere close to 300k bbls of oil. Guess I'll keep looking. Those press releases couldn't be misleading folks that badly, could they?

[Pops]

I think it was the CEO of EOG who last year said last year was the peak of shale growth.

[John_A]

$this->bbcode_second_pass_quote('ROCKMAN', '
')Still haven't found a population of recent wells that look as though they'll average anywhere close to 300k bbls of oil. Guess I'll keep looking. Those press releases couldn't be misleading folks that badly, could they?

[dcoyne78]

$this->bbcode_second_pass_quote('ROCKMAN', 'D')C - Same stats for Chesapeake: during May 2012 they put 16 wells on production. Only 5 were single well leases and during the first 12 months they produced 59k, 67k, 72k, 96k and 105k bbls of oil. During the first 12 months those 16 wells produced an average of 38.9k bbls of oil each.

Still haven't found a population of recent wells that look as though they'll average anywhere close to 300k bbls of oil. Guess I'll keep looking. Those press releases couldn't be misleading folks that badly, could they?

[dcoyne78]

$this->bbcode_second_pass_quote('ROCKMAN', 'D')C - Here are some for numbers for every to contemplate especially the optimists amongst us.

In May 2012: 235 leases began producing from the EFS. Of those leases 27 had been plugged and abandoned by May 2013. Of those abandoned leases the best production was 31k Bo and the worse was 3k Bo.

Just 101 lease had only one well on it. The ten best cumulative production for the wells beginning in May 2012 and still producing in May 2013: in k bo - 246; 234;210;206;202;193;183;181;178;177. The worse ten wells in that same period: in k bo - 11;11;12;14;16;17;19;19;25;29. And these are the weeks still producing. I'm pretty sure none of them will make 300k bo.

The pubcos, and others, like to point out those press releases about ther big wells. But did you see any news about those 27 leases that didn't produce for even 12 months before they were plugged and abandoned? How about those ten wells that are still producing in May 2013 but have only averaged about 15k bo for their first year? But I bet the folks that made those 200k+ bo wells the first 12 months have hit the PR trail big time. And thus the risk for anyone to trying to characterize any trend based upon just those pubco press releases. Not quit the whole story.

[John_A]

$this->bbcode_second_pass_quote('pstarr', '')$this->bbcode_second_pass_quote('John_A', 'T')he idea that government scientists can sort through the hype but everyone else falls for rosie scenarios hook, line and sinker is a bit disconcerting.

[ROCKMAN]

John - I think one aspect of the disagreement is a bit of apple to orange comparison. There the expectation of a company stock increasing in value vs. how profitable a trend or group of wells may be. Over the years I've made good money on incompetent companies working good trends, competent companies working in poor trends, a good bit of profit from poor companies working in poor trends, etc, etc. I once made a lot money riding with a company I knew had zero chance of success IMHO. It's always about timing. The shales in general can be profitable. I also know some players in the shale that will certainly lose their ass. But believing that would stop me from playing their stock.

[John_A]

$this->bbcode_second_pass_quote('ROCKMAN', 'T')he shales in general can be profitable. I also know some players in the shale that will certainly lose their ass. But believing that would stop me from playing their stock.

[ROCKMAN]

John - Not that Art needs me to defend him but he became so focused on Chesapeake as the poster child for shale hype that he tended to ignore shale players that had a better handle on the trends. And as we saw much of what ailed chk wasn't the shales themselves but management. But in the end there are still two metrics to measure shale profitability: how much to be made producing the wells and how much to be made on the shale player stock. I still consider Petrohawk to be one of the most successful shale players despite the fact they did relatively little drilling. Flipping the company for $12 billion made the a star in my book. Their drilling efforts...not as much.

DC - I did make on goof by not pointing out my numbers were for oil only and didn't include NG or ngl's. But since they tend to be somewhat proportional to the oil volumes they give one a sense of magnitude. Working on a tablet at the moment it's not as easy to run the DrillngInfo in Excel. When I'm back next week I'll try to ship you the raw data so you can cook yourself.