Spring 2016 Project

Geology team members, Gage & Gene, discussing ideas during a meeting.The Premise: We are a small Oil & Gas Company that owns and operates 400 vertical wells and has the deep mineral right to 10 horizontal wells. A couple of years ago we declined an offer to sell. However, due to unforeseen circumstances, we are reconsidering our decision and preparing ourselves for a future offer. To be prepared, we want to know exactly what our assets (particularly conventional and unconventional acreage) are worth.

Over the course of eight weeks, with the assistance of industry professionals & college faculty, we worked toward a reserve report of proved developed producing (PDP) wells that we presented on All Scholars Day at Marietta College. We acquired well data from public data or Drilling Info, mapped the wells in ArcGIS, and inputed them into ARIES.Aaron at the beginning of a meeting.

During this project, we examined horizontal development  in the Appalachia with respect to geological, reservoir, and drilling completions approaches. Industry guest speakers guided us through these processes.

Week 1

Meeting 1

Date: January 31st, 2016 Time: 3pm-5pm

Location: Marietta College, Brown Petroleum Building, Room 210

Meeting 1 Presentation Slides

Aaron Dillon Michael UlamFull Room

With meeting one under our belts, we are officially done with the planning process and have begun the first step of our project. Assignment one has been introduced and the finished product will be presented by our members during our next meeting which is on Sunday, February 7th at 3pm.

Assignment One:

Landmen: 

  • Compile a list of operators in Ohio who are active in the Utica shale
  • Download investor presentations for all these companies from their websites (only available for public companies)
  • Download the Utica cumulative permitting activity spreadsheet from the ODNR website
  • Extract and compile key information from these sources:
    • Maps of the Utica shale play, each operator’s acreage and wells
    • Spreadsheet of which operators are in which counties and how many wells they have by status (permitted, in progress, producing) – Pivot table
Geologists:

  • Research and compile key geologic information and development history for the Clinton sandstone
  • Create a map showing our Clinton wells, all other producing Clinton wells, and the extent of the Clinton play (get data from Wes at Week One meeting)
  • Find a type log and cross-section online to show how the Clinton changes across our acreage and the region
  • Use one-line report from Wes to calculate P10/P50/P90 performance metrics for our Clinton wells (get template from Wes)

 

 

 

Engineers:

  • Research reserves reports
    • Describe the elements of a reserves report
    • Describe each reserves category
    • What is it used for?
    • Create a graph and table of West Texas Intermediate oil prices and Henry Hub natural gas prices from as far back as you can find data to the present. Calculate the average of the last 12 months.
  • Work with land dept. to get investor presentations. Compile key economic information in spreadsheet:
    • Utica shale type curves
    • Operating costs
    • Capital expenses
    • NGL yields, fees
    • Whatever seems important

 

 

 

Week 2

Meeting 2

Date: February 7th, 2016 Time: 3pm-5pm

Location: Marietta College, Dyson Baudo Recreation Center, Trustee Board Room

Meeting 2 Presentation Slides || Assignment 1 Presentation Slides

Aaron Speaking Group Shot at beginning of meeting Group Shot from Front

This week we changed location to accommodate numbers. Assignment #1 was presented by the respective members who worked on each specific piece of the project. Assignment Two has been introduced and the finished product will be presented by our members during our next meeting.

Assignment Two:

Landmen: 

  • Start compiling transaction data for Utica From press releases, gather $ amount of sale, number of net acres sold, closing date, buyer, seller, location of acreage, etc. Compile in spreadsheet. Create graph of $/acre vs. date. Will be used for comparable sale acreage valuation method.

 

 

 

 

 

 

 

 

 

 

Engineers:

  • Research investor presentations of shale operators. Find descriptions of their type curves and economic parameters (decline profile parameters, EURs, EUR/1,000’, condensate yield by “window”.
  • Create a table showing what EURs (oil, gas, and NGL) we could expect for a 10,000 ft lateral in each window.
  • If we have 10,000 ft laterals that are 1,000 ft apart, what is our well spacing (in acres)?
  • If we have 10,000 net acres, how many net locations could we hypothetically drill?
Geology:

  • Compile geologic characteristics for Appalachian Utica-Point Pleasant. Summarize in spreadsheet. Aerial extent, thickness, structure, porosity, permeability, water saturation, etc. Compile cross-sections, type logs, and geo maps from public sources.

 

 

 

 

 

 

 

 

 

Week 3

Meeting 3

Date: February 21st, 2016 Time: 3pm-5pm

Location: Marietta College, Dyson Baudo Recreation Center, Trustee Board Room

Assignment 2 Presentation Slides

Adam Majer Permeability Candid Shot EBA 5

Assignment Three has been introduced and the finished product will be presented by our members during our next meeting which is on Sunday, February 28th at 3pm.

Announcements for Sunday, February 28th

GUEST SPEAKER

Clint Perkins, a petroleum engineer for Chevron and Marietta alumnus, will be attending our meeting to answer questions about drilling & completions.

SHIRT ORDERS

We will be ordering EBA embroidered polos within the next few weeks for our members. Email contact@energybusinessalliance.org if you are not a member and would like to order one to support us!

EBA PHOTOS

We will be having headshot photos taken at 2:30pm before the meeting on Sunday. These photos will be used for our member profiles on the website. Remember: business casual! (Shirt, Tie)

Assignment Three:

Everyone: Come up with questions regarding drilling and completions in horizontal shale plays for next week’s guest speaker, Clint Perkins from Chevron.

ENGINEERS

  • Compile capital cost data from investor presentations for pad, drilling, and completion of a horizontal Utica well. Put in a spreadsheet. Estimate what our total capital cost would be for a Utica well with a 10,000’ lateral.

 

 

 

 

GEOLOGISTS

  • In ArcGIS, create a project. Import:
  • Our vertical Clinton wells as spots
  • All the Utica wells to date, color coded by status
  • Utica maps from public sources (need to be geo-referenced so we can super-impose our wells and acreage).

 

LAND DEPARTMENT

  • Continue compiling transaction data. Create summary spreadsheet on average $/acre for Utica shale transactions. Add commodity prices to spreadsheet to see how it impacted $/acre over time

 

 

 

 

 

Week 4

Meeting 4

Date: February 28th, 2016 Time: 3pm-5pm

Location: Marietta College, Dyson Baudo Recreation Center, Trustee Board Room

Assignment 3 Presentation Slides || Week 4 Presentation Slides  

Another successful week has passed for the students of EBA. We have professional headshots done for the website, Clint Perkins, a petroleum engineer for Chevron and Marietta alumnus, attended our meeting to answer questions about drilling & completions in the Utica, and we’ve moved further along with our shirt ordering process.  We also presented Assignment #3 during the meeting, which marks the halfway point for our project.

What we have done so far:

  • -Mapped our 262 Clinton Sandstone wells in Ohio and Studied the formation
  • -Determined the value of these wells at forecasted pricing and discounted at 10%. At this time, our wells are an approximate negative $1,000,000 discounted value over the next 30-50 years due to low production and plugging costs.
  • -Studied the Utica formation
  • -Mapped the windows (oil, wet gas, dry gas) of the Utica formation over our leases
  • -Determined our acreage above Utica formations
  • -Determined expected profitability per 1000’ of horizontal and for 10,000’ laterals in each production window
  • -Calculated how many 10,000’ laterals will fit on our acreage
  • -Researched capital costs for drilling and completions of companies in the Utica Ohio region
  • -Studied transaction data in the area to get a sense of what we could sell our acreage for.

 No Assignment – Halfway Mark / Spring Break

Week 5

No homework to recap.

Topic introduced – reserves report for unconventional acreage. What formation(s) are relevant? What data do we need? How do we use public and private data for our evaluation? Explain analogous data (wells on strike or in same window). Explain EUR/1,000’ and statistical analysis for reserves/type curve assignments. Walk through several projections of horizontal wells. Show data sources (ODNR, PADEP, Drilling Info), what data they give, and how to access it. Show examples of trend analyses. PROVIDE SPOT DATA TO GEOLOGISTS SO THEY CAN DO HOMEWORK.

Homework:

Leadership – finish projections of horizontal wells in our analogous window. Create one-line spreadsheet. Prepare trend analyses.

Engineers – beef up homework from week 2. Nail down economic and type curve parameters for Appalachian shale from investor presentations.

Landmen – using public production data from ODNR, compile list of operators, rank by most active in terms of permitting, drilling, producing activity and by amount of acreage (from investor presentations). Give engineers guidance on which operators are most relevant.

Geologists – import well spots from Drilling Info into ArcGIS, create layers based on permitted, in progress, and producing wells, with geological layers and thermal maturity layers.

Week 6

Topic introduced – go over results of horizontal projections. Do statistical analysis (log-normals) for EUR/1000’ and condensate yield. Pick (as a class) appropriate parameters for type curves. Pick decline parameters for type curves. From Engineers’ week 2 homework, pick economic parameters. Have them explain sources and values. Create the type curve in class, input economics, and generate cash flow in class.

Week 7

Topic introduced – development plan. # rigs at a time. # wells per year.

Homework:

Leadership – add PUD/PROB/POSS cases in ARIES, add type curves and economic parameters, add drilling schedule, generate cash flow summaries by reserves category and overall.

Week 8

Project recap and presentation outline

Final Presentation

Click below to view our All Scholar’s Day Presentation at Marietta College.