Post by
ditchdigger251 on May 23, 2018 6:13pm
Looking At 00/8-21 and 02/8-21 Initial Rate Data
Here's some spreadsheet analysis I've done that I wanted to share based on the released IP17 / IP30 data from the two new 8-21 Hz's. In a later post I'll do a rough comparison along with economics using the rate data for 00/8-21 and 02/8-21 to IBR's P50 type curve from their April 2018 Presentation including PV10 values at $60 and $80 fixed oil and $2.00 gas. Finally I'll post some rough numbers on a development scenario using an average of 11 wells/year drill rate.
Keep in mind that this is MODELLING - which is really just a guess at what reality could look like if a group of what's supposed to be reasonable and realistic assumptions prove out to be at least somewhat accurate. Take anything and everything I show here with a grain of salt - I can always be wrong although I'm trying to give a good realistic look at things. My intention is really to use my experience and knowlege to show others why I hold IBR stock and believe that there is a ton of future value for the shareholder.
The first thing I wanted to know when the rate data was released on May 17th was what could the oil rates peak out at after 30 days or so of decent steady cleanup. There's many thousands of barrels of water to flow back after the fracs so obviously that will overwhelm any ability to produce oil early on. To estimate the IP30 exit oil rate I assumed that Week 1 would produce at 35% of max oil rate, week 2 would average 60%, week 3 would average 85% and week 4 would average 95% of peak oil rate. I checked my results for both wells by "normalizing" the rates for 00/8-21 well (72 stages) to the 02/8-21 well (80 stages) and seeing if the week 4 rates were about equal - which they were (543 bbls/d compared to 544 bbls/d). The "un-normalized" IP30 exit rate for the 100/8-21 well was calculated at 488 bbls/d and the 102/8-21 was 544 bbls/d. The P50 type curve shows a peak oil rate of 561 bbls/d.
The gas rates for both the 00/8-21 and 02/8-21 well is less than type curve - even when 0/8-21 is normalized to 80 stages: the average rate normalized to 80 stages for both wells is 6.85 MMCFD - this does not assume that the gas rate increases past the average rate during the IP17 / IP30 periods which is a very conservative take but given how fast gas rates can decline initially I'm not concerned much on the overall effect on the results. I do however take into account that the oil / gas ratio and liquids / gas ratio are both significantly higher than the P50 Type Curve: the averages for 00/8-21 & 02/8-21 are 30.6% & 40.6% respectively compared to 21.2% and 31.6% for the P50 Type Curve. This is a huge increase in the oil/liquids portion of the total production BOE's and that has a major postive impact on value. These liquids ratios for the two 8-21 wells are in the ballpark of ratios seen in nearby Hammerhead and Velvet wells so we shouldn't be surprised to see such good results but it certainly is a relief! If the wells start out with strong gas rates and good oil & liquid ratios with increasing commodity prices the road to development opens wide.