A Professional Independent Analysis of the TMS
I asked a professional to provide his analysis on the future of the TMS.
He is not privy to "inside" information, which somewhat limits his analysis. Additionally, the operating companies have production information that is up-to-date while the analysis below can use only reported information, which is two months behind.
All that said, the information in red below and the pictures of the various graphs used in the report are the independent analysis of "Mr. Anonymous" using the best available public information.
Any comments I think may be helpful I have added in green.
Please note that the analysis doesn't offer much in the way of conclusions. Mostly, it is just an analysis and you can make your own conclusions from it.
Frankly, any conclusions today will likely change as more information becomes available over time.
That said, I think you will find this report by Mr. Anonymous as valuable as I do as he gives us...
1) An economic analysis of the sensitivity of development assuming 600 MBOE (Goodrich’s most-likely reserve case) per well versus oil price, and
2) “Pictures” of various plots of Cumulative Production versus Days Since First Production for TMS wells. There is a plot for each important completion operator and state. Included in the plots are:
· Encana – Mississippi
· Encana – Mississippi (Zoomed so that recent well results can be seen)
· Goodrich – Mississippi
· Goodrich – Mississippi (Zoomed) (though not noted so on the graph)
· Halcon - Mississippi
· Goodrich – Louisiana
I have plotted all other operators, but none of those have been producing long enough to provide worthwhile information...
I could give the workbook that generates these plots, but there is too much work in it to just give it away.
I expect development to continue if oil prices rebound. My view of the economics below is that an expected sustainable oil price of at least $80 per barrel will be necessary for development to progress. (Other independents) have stated that...$90 per barrel is the number.
Other shale plays will continue to compete for investor dollars. The TMS is definitely one of most expensive plays, if not the most expensive. Will investors continue to finance shale plays as...they have recently? Will OPEC continue with its efforts to keep oil prices down to suppress shale oil development? Is destroying the Russian and Iranian economies part of their calculus?
The production plots indicate to me that Encana and Goodrich were progressing nicely with modifications to well and completion design. The later wells are better than the earlier wells, excepting the Goodrich-Crosby 12H-1.
Each of the most recent 5 Encana wells are “above” the 600 MBOE most-likely case type curve, some substantially:
· The Mathis 29-32H-1 (86.8 MBOE at 194 days) is just above the 600 MBOE type curve.
· The Lewis 7-18H-1 (99.9 MBOE at 168 days) is above my extrapolated 900 MBOE type curve.
· The Lyons 35H-2 (101.6 MBOE at 127 days) is substantially above my extrapolated 1000 MBOE type curve.
· The Pintard 28H-2 (100.8 MBOE at 120 days) is also substantially above my extrapolated 1000 MBOE type curve.
· The Sabine 12H-2 (34.7 MBOE at 40 days) appears be near my interpolated 700 MBOE type curve.
On the negative side, all of the Anderson wells show a “slope” on the plots that is lower than the nearby type curve, likely suggesting that the wells will not follow those curves and that projected ultimate production will decrease as the wells continue to produce. Will the more recently completed wells with newer completion designs do better? Will the type curves prove to be incorrect?
Goodrich’s newer Mississippi wells are also doing well with nearly all at...or above the 600 MBOE type curve:
· The Lewis 30-19H-1 (106.1 MBOE at 227 days) is on the 800 MBOE type curve.
· The Nunnery 12-1H-1 (57.6 MBOE at 216 days) is between the extrapolated 300 MBOE type curve and the 400 MBOE curve. But, this well is the most north-easterly well in the TMS, pushing the limits of marine shale deposition.
· The Denkmann 33-28H-1 (69.6 MBOE at 134 days) is on the 600 MBOE type curve.
· The Bates 25-24 H-1 (52.3 MBOE at 122 days) is just above the 400 MBOE type curve. (The Bates is likewise a delineation well on the north side of the "sweet" spot in Amite County.)
· The CMR/Foster Cr 31-22H-1 (75.1 MBOE at 105 days) is on the interpolated 700 MBOE type curve with a slope suggesting that it is better than that.
· The CMR/Foster Cr 24-13H-1 (64.8 MBOE at 92 days) is just below the 800 MBOE type curve but also shows a slope suggesting that it is better than that.
· The Spears 31-6H-1 (57.6 MBOE at 57 days) is also just below the 800 MBOE type curve.
Goodrich’s Louisiana wells are also doing well as the curves show with...more completions to come.
I will not say much about...the Halcon wells. All are poorer than the recent Encana and Goodrich wells, with the exception of the Shuckrow 10H-1. Were they still “learning”? Is the formation not as good west of R1E?