We finally thought we had a good producing well. It started out producing 23,000 barrels a month then the next month, 11,300... then 10,300...then 2,607 back to 5,700 and our check this month just came and it was for 725 barrels. Does this sound right? Thank you for any information.
Dear Ms. Simons,
From what formation is your well producing?
Papineau Trust 17-20 #1H in McKenzie county ND
I looked into your well’s production and it has run 28 days March, 27 days Apr., 25 days May, 17 days June, 22 in July and 8 in Aug. They could be doing some repairs. Contact Brigham oil and ask.
Dear Ms. Simons,
Shale wells typically experience a dramatic decline in the first year…sometimes a decline of upwards of 65%. Your well is very new and as mentioned, the Operator may be doing work in the most recent month.
At the end of the day, shale production is a resource play that provides very small economic gain (along the lines of a single digit Managerial Internal Rate of Return) compared to conventional drilling (which typically produces double digit MIRR). The saving grace to resource plays is that all lands are prospective and that the sunk funds are recovered very quickly.
To understand the economics, I give you a dollar today and you give me back two dollars next month and a total of three dollars over the next two years. A money maker, yes. Like the Austin Chalk play before it in Texas, the operator must continue to drill, and drill quickly, to keep the cash flow intact and to replace the quickly wasting asset.
Don’t book your cruise yet. Wait till the end of the first year of production to see how the well is doing.
As to contacting the Operator, I would not bother them. Their economic interest is much greater than yours and you can rest assured that they are doing all they can to maximize ultimate recovery and preserve cash flow. Can you imagine the increase in staff if every royalty owner on every well called every month to see what is going on with their well? There are not enough hours in the day.
Thanks DeeAnn for your information. Do you subscribe to the well production site with NDIC? I see where for $12 a year you can have it sent to your computer. I have been thinking about doing that.
DeeAnn Solberg said:
I looked into your well’s production and it has run 28 days March, 27 days Apr., 25 days May, 17 days June, 22 in July and 8 in Aug. They could be doing some repairs. Contact Brigham oil and ask.
Thanks to you too, Buddy for taking the time to explain things to me. This leasing and production of mineral rights has been very interesting and fun to learn all I can about it. One more question. How come we get $66 for oil production and on the news it is $82 a barrel? I am sure there is a logical explanation.
Buddy Cotten said:
Dear Ms. Simons,
Shale wells typically experience a dramatic decline in the first year…sometimes a decline of upwards of 65%. Your well is very new and as mentioned, the Operator may be doing work in the most recent month.
At the end of the day, shale production is a resource play that provides very small economic gain (along the lines of a single digit Managerial Internal Rate of Return) compared to conventional drilling (which typically produces double digit MIRR). The saving grace to resource plays is that all lands are prospective and that the sunk funds are recovered very quickly.
To understand the economics, I give you a dollar today and you give me back two dollars next month and a total of three dollars over the next two years. A money maker, yes. Like the Austin Chalk play before it in Texas, the operator must continue to drill, and drill quickly, to keep the cash flow intact and to replace the quickly wasting asset.
Don’t book your cruise yet. Wait till the end of the first year of production to see how the well is doing.
As to contacting the Operator, I would not bother them. Their economic interest is much greater than yours and you can rest assured that they are doing all they can to maximize ultimate recovery and preserve cash flow. Can you imagine the increase in staff if every royalty owner on every well called every month to see what is going on with their well? There are not enough hours in the day.
Buddy Cotten
www.cottenoilproperties.com
Dear Ms. Simons,
Oil and Gas are minerals – like the diamond on an engagement ring. Like that diamond, oil and gas has different grades or qualities related to things like heating content and amount of impurities and ease of refining. The higher the quality, the more expensive the diamond or barrel of crude oil is.
The dollars reported on the news is for NYMEX future prices for the benchmark West Texas Intermediate, on 60 day contract, I believe. That is a commodity price and is used by refiners and oil companies (and speculators) to protect or hedge the volatile price of their asset (putting in a floor price for example).
The bad news is that North Dakota Crude is just not nearly as valuable as West Texas Intermediate.
The most current posted pricing is here:
http://crudeoilpostings.semgroupcorp.com/
Hope that this explains things a bit more clearly.
Bonnie Simons said:
Thanks to you too, Buddy for taking the time to explain things to me. This leasing and production of mineral rights has been very interesting and fun to learn all I can about it. One more question. How come we get $66 for oil production and on the news it is $82 a barrel? I am sure there is a logical explanation.
/body>
I have the $50 a year subscription.I believe it allows us to stay more informed. As for contacting your operator, ours is American Oil and they are very forth coming with information and wonderful at answering questions we may have. They along with Texon have actually encouraged our involvement and in doing so we have headed off a couple of potential issues with our deed.
Bonnie Simons said:
Thanks DeeAnn for your information. Do you subscribe to the well production site with NDIC? I see where for $12 a year you can have it sent to your computer. I have been thinking about doing that.
DeeAnn Solberg said:I looked into your well’s production and it has run 28 days March, 27 days Apr., 25 days May, 17 days June, 22 in July and 8 in Aug. They could be doing some repairs. Contact Brigham oil and ask.
DeeAnn, I have talked with the division order office of Brigham Oil, so what office would you suggest I ask for about this type of information?
Thanks,
Bonnie
DeeAnn Solberg said:
I have the $50 a year subscription.I believe it allows us to stay more informed. As for contacting your operator, ours is American Oil and they are very forth coming with information and wonderful at answering questions we may have. They along with Texon have actually encouraged our involvement and in doing so we have headed off a couple of potential issues with our deed.
Bonnie Simons said:
Thanks DeeAnn for your information. Do you subscribe to the well production site with NDIC? I see where for $12 a year you can have it sent to your computer. I have been thinking about doing that.
DeeAnn Solberg said:I looked into your well’s production and it has run 28 days March, 27 days Apr., 25 days May, 17 days June, 22 in July and 8 in Aug. They could be doing some repairs. Contact Brigham oil and ask.
We had a change in our Deed status in May and had filed updated information with Williams County, come the first of Sept. we inquired about when our first payment would be sent and discovered the changes in our deed were missed by the Division Dept. and the payment was about to be sent according to our old Deed. It wont hurt to just make sure all the info is right so you don’t hit any road blocks.
Bonnie Simons said:
DeeAnn, I have talked with the division order office of Brigham Oil, so what office would you suggest I ask for about this type of information?
Thanks,
Bonnie
DeeAnn Solberg said:I have the $50 a year subscription.I believe it allows us to stay more informed. As for contacting your operator, ours is American Oil and they are very forth coming with information and wonderful at answering questions we may have. They along with Texon have actually encouraged our involvement and in doing so we have headed off a couple of potential issues with our deed.
Bonnie Simons said:
Thanks DeeAnn for your information. Do you subscribe to the well production site with NDIC? I see where for $12 a year you can have it sent to your computer. I have been thinking about doing that.
DeeAnn Solberg said:I looked into your well’s production and it has run 28 days March, 27 days Apr., 25 days May, 17 days June, 22 in July and 8 in Aug. They could be doing some repairs. Contact Brigham oil and ask.