re: Davey Jones 2 Flow Test.......highlander strikes pay!

What's the difference?

Just looked at the link. Are they really going to produce deep water NG?

Can you explain this a little more? I'm in the industry, but I concentrate on topsides.

Even with the drop in oil prices, gas is worth less than oil on an energy unit basis. Just divide MCFD by 6 to get the classic "energy equivalent" oil rate. Obviously the financial equivalent conversion is much different, but the MCFD/6 has been an industry standard for a while to convert gas to BOEPD (barrels of oil equivalent per day). Add this to the liquid hydrocarbon rate in BOPD to get the well's total BOEPD rate.

There are a few broad types of hydrocarbon liquids (at a layman's level). Oil is liquid underground in situ, condensate is liquid hydrocarbon that condenses out of gas wells (wells that are fully gas underground). NGL's (natural gas liquids) are a third type that condenses further out of the produced gas, generally downstream of the producer's sales point or in a plant set up specifically to recover these additional, and generally lighter, hydrocarbon liquids.

Oil is generally the most valuable, followed by condensate, and then NGL's. But it really depends on the specific composition and which pipeline company the operator is selling to.

The point of all of that is that you can make money with a pure gas well, but the liquids really add value. In some of the shale plays the gas wells in the wet gas window have yields upwards of 100 bbl/MMCFD (so 1000 BOPD condensate and NGL on a 10 MMCFD well). But I am not really an expert in the shale gas plays.

That's all not very helpful....if this test is dry gas @ 40mmcfd that would result in 40,000 X $2.80 (Henry Hub is about $3/mcf and assume some transport cost) so that's about $112,000/d, $3.36MM/mo...equates to about $40MM/year....but that would be in a world of 0 rate decline and other costs which is unrealistic so it's likely going to come in well below $40MM/yr and declining month over month. I think the well cost well over $100MM...so is that really an economic discovery? I can't answer as I dont know the details.

I answered the questions of what are liquids and why do they matter for this well. If anything, your math confirms the importance of a liquids yield in whether or not this is an economically successful venture - that and the decline rate of production.

I'm guessing that if its completed in the Wilcox that it will have a significant amount of liquid hydrocarbons with the gas.