This is going to be the least productive and most expensive well on the WG acreage. So if that is going to be commercially viable the ones to follow should be a doddle. As OF points out - Majors are good at writing cheques and organising multi well projects- But they still end up using the likes of UOS to actually do the drilling and fracing, so would a direct deal with UOS be practical. The beauty of this type of gas well is that the first year gives you the biggest gas flow so UOS would get their money pretty quickly. Production plant and piping could also be done in a similar way. Once we get the ball rolling the rest falls into place as the cash starts coming in. And the upside is we get to keep 100%. Means a lot of work for OF and his staff but that's what they're being well paid for. Also means no JV cheque but there's probably enough in the accounts to get things started and we could be getting something from a Barryroe sale. . . . Just a thought.
Not only are the chances of success much higher for unconventional than conventional, it is also significantly cheaper to drill a well and frack it . Marathon are also revisiting old fracked wells and refracking with the new technology available. This will revitalise old unconventional wells that were fracked years ago. These old wells were fracked in one to five stages years ago, they are now getting 20+ stage fracks with very good results. The costs of fracking are also reducing once the exact formula for optimum success has been found. marathon are fracking new wells now for $5 million and achieving $41 million payback per well. I am not saying this WILL be the same for SLE etc in Poland, but may well be as profitable here as there.
At this stage in the game I take particularly consolation from your comment "you drill a hole your going to get results" so at very least we should get some gas flows/revenues albeit not at optimal rates - however the main point of the article which stood out in my mind and was one which you in fact reiterated in your comments:
"they knew how much oil and gas it contained but didn't know how to produce it, once the code was cracked it was game over and the risk became negligible."
We all know full well Sle is an exploration company and exploration has many risks and rewards, I guess my posting was in the form of a general appeal to make shareholders more aware of the problems and to make an appeal to give the company more slack as they "stumble" towards bringing the Polish wells on line and rewards to all share holders.
Blackswan, the quote is a bit misleading. Yes it is true that the formations took that long to get the exact formula down but in the mean time all those wells that had been drilled had been put into production, so cash is coming in and at a greater rate than going out. In fact all companies are still changing what they do with the wells, it is like any business, you try to streamline operations, figure out the best way to make a dollar, more ROI etc. That is what they are doing trying to get the best ROI they possibly can out of each and every well.
But the part I really take exception to is that there is more uncertainty and risk involved with unconventional. It is really misleading, the shale is there it is like a flat blanket covering thousands of square miles, you drill a hole you are going to get results, once you have a way to produce it the uncertainty and risk go out the window. Most unconventional in the US and Canada have been well known for decades, they knew how much oil and gas it contained but didn't know how to produce it, once the code was cracked it was game over and the risk became negligible. In the Bakken 99% of the wells drilled are producers, far, far more than what the average is for conventional onshore let alone offshore.
Supply chain issues, well that is a different story! But that is more because of the remarkable growth in the oil and gas industry, not because of the unconventional/conventional issue. Nobody could have predicted that the US would be self sufficient in oil and gas and if anyone could have they would have been a very rich person indeed.
Shale-focused companies traditionally seek predictable and repeatable drilling and completion costs for wells, added Fleming, because unconventional exploration involves greater risks and uncertainty than conventional operations. “It has taken some operators several hundred wells in US formations to achieve the right well design and repeatable supply chain model to stabilise costs,” Extract from the - Natural Gas Daily
Starting to see the problems here lets hope Joel Price is up to speed with the Polish geology?
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