re: Tuscaloosa Marine Shale

quote:

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Huh??? If they produce an average of 250 bopd @ $80/bbl that's $7.3 MM a year. It's paid off in less than 2 years.. I'll take that

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Keep in mind that the $10MM number does not include production costs, marketing and trucking costs, all of which is minimal. What is not is that these operators are only getting 75% net revenue and the mineral owner get on average 25%. So drop that $7.3MM down to $5.4MM.

We have still not seen the long term production numbers. There has been a lot of improvement and learning with the longer laterals and more frac stages, but keep in mind there are operational limitations with these long laterals. THere is a physical limit to how long the wells can be (8000 ft + 13,000 ft TVD = 21,000 ft) most coil tubing used to drill out the frac plugs have 19,500 ft restrictions. Under the right circumstances this can be increased and they are obviously looking for ways to make this work. The oil is there and it can be very lucrative to make it work, but i still believe we are a few years away before you see the kind of drilling that is in North Dakota and TX. There still needs to be improvements to technology and frac designs to overcome the poorer quality of the rock.