RE:RE:Q4 production data Hi Oilyexec,
Thanks for taking the time to reply with such detail, it is always interesting to hear what a fellow professional thinks. You clearly have valuable insight into this area (which I have never worked in professionally) that I encourage you to continue sharing on the board. The more quality posters we can get, the better for all.
To the topic of GOR, these are my own views (as a reservoir engineer):
- The fluid properties and current reservoir pressure vary a lot across the Cardium play, as well as over YGR land holdings.
- There’s a strong correlation between EUR (both on a BOE and oil basis) and how much an area has been drilled before – virgin areas (like the part of Cheddar YGR targets now) have high (inital?) pressure and consequently high well rates and EURs. EUR degradation in an area over time due to regional pressure depletion is one of my main concerns.
- Pressure depletes quickly, especially around the well bore, leading to liquid drop-out and reducing oil cut. Well productivity gradually reduces with declining reservoir pressure, leading to slower decline in gas than oil
- Frac ageing could be an issue, but then we are talking about years, not months.
- Bubble point varies across YGR land holdings, in some areas, the wells stabilize around 50-70% oil cut, in other areas like Cheddar oil cut trends towards 20%, or even lower.
- In the end of the day, it is the area type curve with its composition of products and resulting economics that matter, not if the GOR is high or low. In West Willesden, the wells are oily but low rate, and BE is significantly higher than in West Ferrier or Cheddar.
- It is in a way an economic advantage that the GOR increases…what I mean is that a disproportionate amount of the oil is produced in the first 6 months of the wells life, leading to quicker pay backs. For example, the two 4-17-37-7 that came online in August have already produced some 50k bbl oil each, and probably already reached pay-out. It matters less that oil cut has gone from 70% to 30% when BOE stays pretty flat and the well continues to yield strong cash flows from gas and NGLs
- My questions were less of a reservoir engineering character, and more about operational aspects. It is seldom that a whole vintage of wells like the 2017 (17 wells) or 2018 (29 wells) buck the trend and increase collectively. That happened from Nov to Dec, and I was wondering what operational aspects could cause that. GOR is not a factor in this. Perhaps it is the 13thmonth adjustment you mentioned, I had not heard about that before?
On your other points:
- I know there are many commercial tools out that that provide excellent services if you subscribe. The free version of Petroninjaworks for me, and I don’t mind spending 2-3h per month updating my model. I get a good feeling for their wells and how the company develops through my modelling.
- I am including gas shrinkage of the raw well head gas by 10%, and add in plant NGL of 55 bbl/mmcf. I agree with you that royalties are based on sales gas, and oil minus transportation costs.
- My adjustment factor is mainly to deal with WI and to a lesser degree variations in NGL yields (as well as errors in my estimation of legacy production). The matched adjustment factor for Q3 was 90% for oil and 88% for boe, so I feel comfortable with 90%.
Thanks for your civil tone and if I was able, I'd be happy to talk Cardium over a cup of coffee or a beer.
Regards, Darcy