My family has mineral interests in 5,700+ acres in Dimmit County. Newfield Exploration has one horizontal well producing (oil & natural gas combined), another completed or nearly so according to them, and 3 more permitted on our acreage. We have not gotten our first checks yet, so I'm sitting here trying to get rough (very rough) estimates from the Railroad Commission website.
What baffles me is how dramatically the BBL (barrels) seem to be fluctuating and I'm wondering if they are choking it back or what? The first month had almost 11,000 BBL, then it went to under 5,000, and a month after that it was nearly 7,000. Then about 4,000, then 3,500...it has gone up slightly again from February to March (the most recent months I can see).
I do know that there are "hunting lease stipulations" that caused Newfield to cease "drilling and completion operations" in the area from October through January. I'm not sure if or how that could have affected this well which was already producing at the time. I noticed very similar fluctuation patterns in another Newfield well on a lease not far from ours. This is why I assume they are choking it back themselves.
I'm no expert at how all this works (I would be flattered to achieve just the label of "novice"). Can someone who understands this stuff give me an educated opinion? Thank you.
Mr. Keeney, well fluctuation, especially in the first year of decline is normal to me. Pay close attention to days of production. There may have been work done on the well. I think when a well has a pump installed and gets a couple of years old, they can become alot more predictable. The operator may retard the rate of flow, if they think it will give a greater rate of return over time. This should work to your advantage, I wouldn’t second guess them on this. If they make money, you make money. I also suggest you look at the production of some wells that are about 5 years old. Each will be different, and might give some perspective. Good luck with your well.
There are numerous factors that impact monthly production numbers. Some relate to the well, some relate to take-away issues particularly if liquids must be trucked.... both salt water and hydrocarbon. The commissioners may impose road restrictions that limit a truck to a partial load or issues at the SW disposal well such as pond full may back up to the well head. ND had a horrible winter for example and many wells in the Bakken area were without power for several days.
You are paid on when sold, not when pumped. So if trucked, you will reach a point that the day of the month that production is hauled will impact your monthly check if the month ends with full or empty tanks.
Thanks to you both for the information!
It's nice to own a mineral interest and royalties in that many acres. Mineral rights can be nice! It can be any number of things. First, if it's an Eagle Ford shale well, it's likely to drop very, very fast, all else being equal. Just the nature of these wells. Time will tell whether it works out in your area; a lot of hype going around at this time. Yet, even with a rapid decline, there are many factors that can make it fluctuate. Choke size, power availability, trucking availability, mechanical repair, health of the pumper, etc. The well may be giving theme problems and they are experimenting to figure out what to do. Or maybe the pumper is having drinking/woman problems and isn't showing up all the time. (Seen it happen.) It can also be due to pipeline constraints. Over the next few months, you can watch the production and hopefully, it will begin to flatten out. I say, hopefully, for the sake of your mineral rights and royalty!
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Oil and gas mineral rights consultant