Bignote, FP - Vertical -v- Horizontal simple answer as to why they did not go Horizontal = around 3x cost.
However drill three vertical wells with limited production then you could have drilled one horizontal with a 5000ft lateral and if the oil is there you should have it. In a nutshell its more precise, IMO. Technology had advanced a very long way.
A very simple analogy - When you go to give blood, does the DR simply insert the needle vertically or do they insert it laterally along your arm to get into a vein. Both methods will cause bleeding but only one will cause a sustained flow.
With SW - IMO, being overworked is evidenced by the 20% decline in Richardson in only a few short weeks. What is causing decline?
1. The oil reservoir is depleted and only had initial pressure for a short time.
2. There is not that much oil there to start with.
3. The oil is there but tightly held in formation.
Oil is not created overnight, not even in hundreds of years but rather millions of years.
I had an inkling that SW was not going to be very productive from the drilling updates. The lack of information regarding pressure, increased mud weights and lack of gas kicks sent alarm bells ringing for me. This was supposed to be an overpressured environment - one would expect some mention of high pressures during drilling.
SW#2 may be better, the market is giving an opinion of risk/reward. More info down the track will tell the whole story, I am sure.
GGP Price at posting:
1.7¢ Sentiment: None Disclosure: Held
