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Following the my earlier posts with regard to the decline curve published by SEH in its 2009 prospectus, I thought it would be worth posting some information on the Marcellus shale in the USA as it is the biggest dry unconventional gas play in the USA and I believe can be used as a comparison to what we should expect from SEH shale wells. I have highlighted in bold the drop seen in gas flow in the Marcellus and it not good.

So here a good article show how quickly the flow drops.

http://extension.psu.edu/natural-re...n-decline-curve-and-royalty-estimation-part-1
Appalachian Basin Decline Curve and Royalty Estimation (Part 1)

Posted: July 27, 2014
The royalty calculator has been a much asked for tool for landowners to estimate royalties, but past royalty estimations weren't based on Pennsylvania data. Learn what factors are involved in determining royalty calculations and of the new royalty calculator in this two-part article.

courtesy Penn State MCOR

Shale exploration started in earnest in 2004 with just two Marcellus wells drilled. The early stages of shale exploration in the Appalachian Basin included well production estimates based on experience with other shale formations like the Barnett Shale in Texas or Fayetteville Shale in Arkansas. While the early estimates were useful for company’s interest in further Marcellus development, the lack of actual production data made estimating production from an Appalachian Basin well somewhat challenging. To create better well estimates and help owners of oil and gas rights estimate potential royalties, it is important to look at a variety of factors including initial well production, decline rates, and overall production.
Initial production (IP) from a well is used to estimate the potential for future production. A basic view of initial production would suggest the higher the initial well production the more natural gas the well will produce over its lifetime. While IP rate is often a great guide to future production several factors can influence the IP rate, including but not limited to geology, contact with the formation, and the number of stages completed. Geology of the formation determines how much natural gas might be available for extraction (technically recoverable reserves). The geologic characterization of the Marcellus does vary considerably, sometimes even on the same well pad. The IP rate may also be influenced by the length of the horizontal wellbore in the shale formation. Basically, the more formation a company has in contact with the wellbore (longer the horizontal lateral), the higher the initial production might be. Finally, the number of wellbore stages completed is also thought to influence initial production. A stage is a portion of the wellbore completed at a given time. A typical 5,000 foot horizontal wellbore may include 10-35 stages ranging in length from roughly 100-500 feet each. The influence of the number of horizontal stages on initial and overall production is still a topic of great debate and continued research; however, many (not all) exploration and production companies are trending toward more and shorter stages.
The initial decline, or decrease in production, over the first year of operation of a shale well is an important variable in estimating the potential for future production. Generally, the steeper the first year decline in production, the lower future production estimates will be. By way of example, if a well has an initial production rate of 10 million cubic feet (mmcf) per day, and declines over the first year to 3 mmcf per day, future production estimates need to be based on 3mmcf per day. The average first year decline rates across Pennsylvania appear to range from approximately 60% to 80%. The initial decline is also referred to as a hyperbolic decline, which is often seen in shale decline curve graphics as the characteristic hockey stick pattern of a steep initial decline. As shale wells remain in production, the volume of natural gas will shift from a sudden rush and rapid decline to a steady exponential decline, represented by the straight portion of the decline model. Both hyperbolic and exponential decline rates can be seen in the average cumulative production/decline curve for Pennsylvania above.
Next week, we'll discuss lifetime production of the well and the new royalty estimation calculator.
James Ladlee, Associate Director, Penn State Marcellus Center

Bottom line is I expect SEH vertical wells to perform in a similar way and given the current low IP for the vertical wells I have to say they will never be commercial in my view, but that's why you have a pilot production plant?

But as I said before SEH could have identified this possible problem (if it is a problem, but we don't know) by doing some long term testing on a few of its earlier wells before sanctioning drilling 74 wells plus and building an expensive pilot plant.

Now we need to think of the potential of the horizontal wells, is an IP of 4.93 MMscf enough?