Ann: Eagle Ford Shale Quarterly Update and Append, page-27

re: Ann: Eagle Ford Shale Quarterly Update an... Johno,

It's not as simple as that because the rate of decline will itself decline as time moves on.

The rock is very impermeable. The gas does not so much flow through the rock as migrate. The larger the molecules, the slower the migration. Formation pressure is also a factor - it's huge in our region.

Logically what might happen (I'm not a geologist) is that, initially, the gas near the surface of the rock (the fraccing creates those exposed surfaces) escapes under the huge pressure quite quickly. If the gas is allowed to escape too quickly, the pressure differential between that at a shallow depth under the surface and the surface itself (well pressure) might be sufficient to cause the surface to onion-skin off - that will block the well.

As time goes by, the pressure gradient (pressure plotted against depth from exposed surface) will reduce, and so will the rate of migration of the gas - it is the pressure gradient that drives it. That is the decline in production measured.

The greater the effectiveness of the fracc, the greater the surface area opened up by the induced fissures and the less distance in the rock for the gas to migrate before reaching a surface to escape from.

The decline rates are therefore not fixed for ever and a day for a particular area. The formation pressure must be there but then it is the completion technology that will determine the success of the well.

In my view, lower decline rates are as much a statement of the skill of the operator/fraccing crew as a statement of the quality of the reservoir.

That is my picture of what happens.