Tuesday, March 5, 2013

Cabot Oil and Gas Bragged About EURs

All shale gas companies love to brag about the EURs (estimated ultimate recovery) of their best producing shale wells, Cabot Oil and Gas (COG) is no exception.

On Feb. 20, 2012, COG made mention of two most productive Marcellus shale wells on the same pad and claimed:

Specifically, in data just released by the Pennsylvania Department of Environmental Protection (PaDEP) on cumulative production for the last six months of 2011, Cabot had eight of the top 10 performing wells. In addition, for two of the identified wells, Cabot booked initial estimated ultimate recoverys (EURs) in excess of 20 Bcf each. These two wells, on one pad, have been on production for about 275 days and have cumulative production of 4.5 Bcf each. The Company does have one other well that has exceeded 5.0 Bcf of production since being placed on-line in the summer of 2010. "Also of note, is the result from our first pad drilling effort, which to date has produced 12.5 Bcf in less than 500 days and is still producing about 16 Mmcf per day from three wells," said Dan O. Dinges, Chairman, President and Chief Executive Officer.

An EUR of 20 BCF each well? Wow. That would have been hugely profitable. These two wells are indeed exceptionally good ones. But I know that when a shale company claims that a well's EUR could reach such and such level, you'd better chop half off their numbers to get a more realistic number.

How are the productions from these two wells stacked up so far?

I identified those two wells as well no. 115-20375 and 115-20378.

You can get the actual well production from the PA DEP web site:

Well No 115-20375:
  • H1-2011: 898,773 MCF in 40 days, or 22469 MCF/day
  • H2-2011: 3,028,634 MCF in 184 days, 16460 MCF/day
  • H1-2012: 2,169,999 MCF in 181 days, 11989 MCF/day
  • H2-2012: 1,380,137 MCF in 184 days, 7501 MCF/day
  • Total production by end of 2012 was 7.48 BCF
  • Estimated end of 2012 production rate was 5880 MCF/day
  • Estimated end if 2012 decline rate: -0.255%/day

Well No 115-20378:

  • H1-2011: 909,051 MCF in 40 days, or 22726 MCF/day
  • H2-2011: 2,884,292 MCF in 184 days, 15676 MCF/day
  • H1-2012: 2,029,866 MCF in 181 days, 11215 MCF/day
  • H2-2012: 1,270,247 MCF in 184 days, 6904 MCF/day
  • Total production by end of 2012 was 7.09 BCF
  • Estimated end of 2012 production rate was 5364 MCF/day
  • Estimated end if 2012 decline rate: -0.264%/day

Based on those data, well 115-20475 is expected to produce 2.3 BCF more, bring the ultimate production to 9.8 BCF. Well 115-20378 is expected to produce another 2.0 BCF, bring the total to 9.12 BCF. So the realistic estimate of those two wells are 10 BCF each. That is far from COG's 20 BCF original estimates.

COG bragged.