RE:New President's LetterSportster,
It depends. Within a reservoir you will be drilling pads to capture pools of resource. When you drill a pad, you typically want to drill the entire pad worth of wells at the same time to avoid frac-hits. You space out your pads to maximize coverage of the resource. In general though as you target these pools on your lease, wells in the edge of a pad are targeting less pay (thickness of resrouce) and pads on the edge of a pool are also going to be marginal. They are very capital efficient as your rig is already there, and you have invested in all the surface infrastructure already (power lines, road, collection pipelines, and the clearing/building the actual pad itself).
Since you are following roads, collection pipelines and minimizing distance to your plant; you will inevitable get is a mix of productivity. Saying this, you build your plants where you start development of a new area and you start your development at the best spots. This decline gets countered by well productivity gains. As you develop an area you understand the geology better, learn what complementing design is optimal. The best well spacing, how much sand, how many frac stages, etc. Also drilling technology improves, initial horizontal wells were a few hundred meters long, now wells more than 3km horizontally are normal. Longer wells are very Capex efficient, you capitalize on all the infrastructure you put in (roads, pipe, pads) but your wells are more productive covering more of the reservoir per well. This means more production and ultimately less pads you need to fully develop the play.
That said at a portfolio level, Peyto has acreage in lots of plays and each play has different rates of return. Where to invest money comes down to capacity at your plants, personel, commoity rates, etc. A couple years ago during the famine years, most companies drilled through their wettest gas plays to get the most NGLs possible, as gas was worthless and it was a matter of survival to get any revenue. They also ran through their most productive drilling locations. This effect does help create the boom in energy and raise breakevens by causing the rush to better lands.That said, the WCSB has 3400+ tcf of gas...
Wonder how active Peyto has been in recent land auctions.
Shale Drilling Map