what to expect in a j/v?, page-5

Hi Morebull and other respondants

DJ yes a cheeky bid could be at 10c but I think it would be
less than that our land has to be proved up first.

A lot of people would sell at 4-6 cents a 100-200% gain would be hard to resist

This was going on the other thread but its been TOUd so will put it here



Hories will be drilled whenever it works out to have the best economics and/or if its the only practical way to drill a particular area but there will likely be plenty of verticals drilled. In the end its finding the best way to get the most oil out of a given area.

Pioneers spending 60% of its butget on verticals this year its only just started on Hories

I mentioned somewhere yesterday that they are now weaving Hories around vertical wells and fraccing the reserves between.

The Wolfcamp in our acreage is up to 1200Ft thick thats a lot of shale.

Just some light reading to get you in the mood.



"New life for idle acres
Dallas-based Pioneer Natural Resources is
the monster of the midway with a 900,000-acre
footprint down the axis of the Midland Basin.
Here the company is in full development mode
manufacturing vertical Spraberry wells, ofgo. The full power of its capex is deployed here
at $1.5 billion for vertical wells, 60% of its total
expenditure.
So the company deems the revelation of the
commerciality of the horizontal Wolfcamp play
on some 200,000 idle acres on the southern end
of its holdings in Upton, Reagan and Irion
counties to be pure upside—with extreme potential.
“It became clear there was a burgeoning
new play down there,” says Dove. Seeing offset
operators testing the play a bit further south, he
acknowledges, “The well results were quite excellent.”
Here, where the Spraberry sands thin and are
less economically viable, old shallow production
has held most of this acreage in Pioneer’s
portfolio for decades. A drilling rig was a distant
memory to mineral holders. But with
50,000 acres picked up in a university lease sale
five years past now exposed to expiration, Pioneer
jumped into action. Awakened to the potential,
this is where the operator is
concentrating its efforts over the next two
years.
“We want to make sure to preserve the value
of those leases,” Dove emphasizes.
Why the urgency now? Based on his unique
perspective, the horizontal Wolfcamp “could
become one of the most significant plays based
on our current understanding of it.” Dove even
goes as far as putting the “game-changer” tag
on the play. With thousands of cores, log data and
petrophysics from its massive vertical
campaign in Pioneer’s databank,
Dove suggests a minimum of 400,000 company
acres are prospective for commercial production
from the play, and he would not be surprised
if the entire 900,000 prove productive
over time.
The play is immense, he declares. “The areal
extent of this and the productivity potential
measured in oil in place is so large that it’s
going to be one of the truly burgeoning shale
plays in the U.S.” And it’s oil, which, in a
$100-per-barrel oil environment, is meaningful,
he says.
In third-quarter 2011, the company drilled its
first horizontal well, located in Upton County,
with a 5,800-foot lateral and 30 stages 200 feet
apart. It produced 854 BOE on a 24-hour restricted
rate and averaged 643 BOE over 30
days. Pioneer’s second well, also in Upton
County and with a 5,800-foot lateral, mirrored
the first: 807 BOE per day IP (75% oil, 18%
natural gas liquids, 8% gas) and an average 30-
day rate of 677 BOE per day. Both wells were
completed pumping 220,000 pounds of sand
and 300,000 gallons of slickwater fluids per
stage.
“They are exceeding our expectations,” he says.
These wells—60 miles northwest of most inspin-ustry activity and the first horizontal Wolfcamp
test wells in Upton County—derisk the
play northward.
The company is landing the lateral in the
upper zone of the middle Wolfcamp, just below
the Tippet shale that divides the middle and
upper Wolfcamp members. Microseismic confirms
the fracture stimulation is reaching the
full 400 feet of thickness above and below the
wellbore of each Wolfcamp zone for 800 feet
of effective stimulation.
The next two wells in Reagan County to the
east will be drilled with 7,000-foot laterals and
35 stages, each 200 feet apart. Beyond extending
lateral lengths, Dove says the company is
not experimenting with completions so as to
better understand predictability. “We’ll do that
after establishing the productivity of the wells.”
Pioneer projects ultimate recoveries from
Wolfcamp horizontals in the range of 350,000
to 500,000 BOE, but the first two wells already
look to exceed the average of those. “The first
well has already made 45,000 barrels in the first
90 days,” notes Dove. “That’s a good sign.”
Dove estimates the company has exposure to
more than 1 billion barrels of net resource potential
from the upper and middle Wolfcamp
alone. That doesn’t consider potential in the
lower Wolfcamp, nor the Strawn, Atoka, Jo-
Mill or Mississippian intervals that could be viable
horizontal targets.
The horizontal Wolfcamp will be the fourth
Texas-based growth play for Pioneer. Havingjust brought in a third rig for Wolfcamp, the
company plans to have up to seven rigs running
by year-end, going to 10 in 2013. That pace
will result in up to 35 wells drilled this year,
topping at 80 to 90 by year-end 2013 to successfully
hold any expiring acreage. Its expected
2012 average production rate: 2,000
barrels per day.
The $275 million budgeted this year, including
a 260-square-mile, 3-D seismic program,
represents just over 10% of Pioneer’s 2012
budget. “This horizontal Wolfcamp play will
start taking a growing proportion,” Dove anticipates.
At an average $6.5 million modeled per
well, with 2,900 horizontal locations on 140-
acre spacing, he projects $20 billion will be
needed to develop just 400,000 acres."

Cheers Whisky