another todd1956 post: Been there and done that in the 70's and 80's both privately and publically on NG shale wells. After decades of drilling, producing a thousand or more wells I am still in the camp of 'show me the money'. I see very little improvement in production decline rates in the various shale plays that we are now involved in across the US. The big difference is the wells are now sideways with more formation exposure but the total costs of regulations, drilling and completions have risen exponentially hence returns that still keep the operator on the 'shale treadmill' IMHO. Yeah we can find some good ones but there are a ton of piss poor shale wells that get lost in the promotion shuffle too. Those of us that drill on our own unborrowed money still rely on the age old metric of 'payout', a term lost in the world of voodoo accounting and easy money promotion of using OPM. Payout is not only reliant on the ability to find, produce and market the producs for a price that generates enough internal cashflow to drill the next shale well. The first time you hit a poor one the treadmill ratchets up the speed and it is very hard to overcome without some luck. In my area here in SE Ohio I am personally aware of some pblic company wells in both the Utica and Marcellus that have been reported at 30MMCFD plus that when actually put in line for 30 days do not do 20% of those IP reported volumes. This is not an isolated situation either.
Don't get me wrong I am in favor of finding all the energy domestically we can for national security etc. but I reiterate the posts I have printed many years ago that I still feel that these non reservior shale wells will not be the holy grail of the US energy situation 'LONG TERM' that they are being touted as now. Should prices stay low ( like the 80's ) for a prolonged period of time for whatever reason, the shale boom will once again become the shale bust and it will represent the greatest destruction of energy company capital that the industry has seen to date. The big difference from the 70's and 80's will be that it will be borrowed money lost instead of internally generated cash used for the process.
For the record I have sold all but one of my companies to public entities in the latest gold rush here in Utica land and am now drilling and testing a shale that lies much deeper than the Utica shale in quest of the next golden goose. If my partner and I are successful in finding a new reservior we have already made the deal that lets us ride into the sunset on more public company money. Fingers crossed !!!
Let the bashing begin.
TRADE WELL and PROSPER...TODD1956
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