All wells operate on a decline curve. This is an u
Post# of 39368
Posted On: 11/11/2013 10:35:07 AM
Re: 2020Investor #21863
All wells operate on a decline curve. This is an unavoidable and undisputable fact. As a well pulls from a non-renewable resource pool, the area in which you can and will pull from gets smaller and smaller. This is a known factor in all oil and gas operations.
There's usually an IPR surge, followed by a lower consistent production for about 1-2 months then another decline to about 50% of the consistent production rate that can last from one year to a decade or more. Normally, this period lasts 3-5 years and then you see another decline to about 3-5 BOPD (similar to what the Mitchell #1 and Stockton #1 are currently producing at, and at this point the well is considered a "marginal or stripper well"). This is a typical decline curve.
There are wells that have an IPR of 200+ that decline to one to two barrels a day within a month. It really depends on the porosity of the sediment layers and many other factors (number of laterals, acid/swabbing combinations used, pressure, etc.) We chose this area because of the general stability and predictability of the field.
One thing to mention that we have harped on before is that this one well is producing the same amount of oil that all the stripper wells in TECO's inventory in 2012 was producing. The two wells combined are doing almost triple if not quadruple the previous inventory. With two additional wells going online and now the project expanding to initially 3 wells then to 10 more, production builds and we're banking on that consistent production rate (hence the statement that its at the 'bottom' of the production decline curve).
The Company, along with other O&G companies, builds on stable production. If you have 10 wells consistently producing 15 BOPD for a year, that's a consistent profit of 5.4mm (assuming $100/bbl) per year. If you had a well that produced 150 BOPD for one month then dropped to 1 BOPD, the 15-25 BOPD well will out produce the 150 BOPD well over time. These are all factors we look at before drilling.
TECO is not looking for ONE large well that will just decline to 10-15 BOPD. We're looking for stable and reliable producers that will reliably produce in a cost efficient range for multiple years. Don't get us wrong, we would LOVE a large consistently producing well, but ultimately, just like every other well, it will decline. We're on the hunt for those wells, but a 10-15 BOPD consistently producing well is a great investment.
There's usually an IPR surge, followed by a lower consistent production for about 1-2 months then another decline to about 50% of the consistent production rate that can last from one year to a decade or more. Normally, this period lasts 3-5 years and then you see another decline to about 3-5 BOPD (similar to what the Mitchell #1 and Stockton #1 are currently producing at, and at this point the well is considered a "marginal or stripper well"). This is a typical decline curve.
There are wells that have an IPR of 200+ that decline to one to two barrels a day within a month. It really depends on the porosity of the sediment layers and many other factors (number of laterals, acid/swabbing combinations used, pressure, etc.) We chose this area because of the general stability and predictability of the field.
One thing to mention that we have harped on before is that this one well is producing the same amount of oil that all the stripper wells in TECO's inventory in 2012 was producing. The two wells combined are doing almost triple if not quadruple the previous inventory. With two additional wells going online and now the project expanding to initially 3 wells then to 10 more, production builds and we're banking on that consistent production rate (hence the statement that its at the 'bottom' of the production decline curve).
The Company, along with other O&G companies, builds on stable production. If you have 10 wells consistently producing 15 BOPD for a year, that's a consistent profit of 5.4mm (assuming $100/bbl) per year. If you had a well that produced 150 BOPD for one month then dropped to 1 BOPD, the 15-25 BOPD well will out produce the 150 BOPD well over time. These are all factors we look at before drilling.
TECO is not looking for ONE large well that will just decline to 10-15 BOPD. We're looking for stable and reliable producers that will reliably produce in a cost efficient range for multiple years. Don't get us wrong, we would LOVE a large consistently producing well, but ultimately, just like every other well, it will decline. We're on the hunt for those wells, but a 10-15 BOPD consistently producing well is a great investment.
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