shale

For those who follow the shale story, below from the Eagleford or EFS, one of the major trends, is something written by a guy who now drills wells for a private company and has been at it for 40 years, deals with facts and writes in a no nonsense style.
It's a sobering look at the BS that has gone on with regards the EUR or URR's in these wells and the decline rates and is a heads up for how quickly production could drop off with continuing low prices. These figures will eventually go mainstream.

"Now that the production data is coming in and we've see the reality of the decline of drilling efforts in the EFS I figured it was time to update the subject matter. We're now well beyond some of the theories, speculations and silly predictions. And in another 6 months or so if oil prices stay at current levels we'll be able to kill the rest of the unrealistic optimism. I'm showing the stats for just one month...July 2014. But month to months variations are minor:In July 2014: 125 Eagle Ford Shale wells began producing. I won’t use the July production because I can’t tell which wells produced for 31 days or 1 day: just the total monthly production. So I’ll use the August production for those wells and thus have a full 31 days.First shocker for some folks: by May 2015 40 of those 125 wells were no longer producing. Those depleted wells averaged just 56,000 bo and 0.11 bcf. So much for the BS about increased efficiency and productivity from longer laterals, lots of frac stages and pad drilling. And the 89 wells still producing in July 2015: average recovery to date: 122,000 bo and 0.36 bcf. And how much were those wells producing during July 2015: 178 bo/day and 17,000 mcf/day. And the initial production rate of those 129 wells: 556 bo/day. And the average initial production rate of the 89 wells still producing in July 2015: 586 bo/day.So to summarize: of the 129 EFS wells that began producing in July 2014: 40 wells (31%) suffered a 100% decline rate per year. Actually it's higher since not all produced for the entire 12 months but I’ll let that slide: there were 4 wells that stopped producing after a month or so and only recovered less than 6,000 bo each. And the 89 wells still producing in July 2015: they have suffered a decline rate of 73%.The first take-away is that those 350,000+ bo URR’s numbers that were tossed around a few years ago were complete BS. Especially when you consider how some folks have been touting the great improvements in technology/efficiencies in the last year or two. But even more important: thanks to the lag time between drilling and first production we saw an increase in EFS production during 1Q 2015. So in addition to the lack of increase in EFS production in the near future from the lower rig count: those wells during 1Q 2015 that boosted production will see a significant decline by 1Q 2016. The only good news is that wells drilled before 2014 are in their lower decline rate phase. The bad news: that decline is from rates significantly lower than when they first started producing. As I said back when oil prices started to collapse and the cornies couldn’t give up their arguments: just wait until next fall...the data will eventually show the difference between hopium and reality. And now we have the data: much of the debate is over. And by the end of 2Q 2016 the arguments over how quickly the EFS production will decline will also be over assuming we don’t see significant increase in oil prices.
As always: data trumps theory"

Cheers Whisky