november 2009 - permian basin landmen's association

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THE PERMIAN BASIN LANDMEN’S ASSOCIATION PBLA TAKEOFF VOLUME 66 November 2009 ISSUE 55 Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition, development, exploitation and exploration of oil and natural gas properties. The Company's operations, which are headquartered in Midland, are focused in the Permian Basin of Southeast New Mexico and West Texas. Our operations are primarily concentrated in the Permian Basin, the largest onshore oil and gas basin in the United States. The Company’s estimated mid-year 2009 net proved reserves were 154.5 MMBoe, which 99% of our total estimated net proved reserves were located in the Permian Basin and consisted of approximately 65% crude oil and 35% natural gas. We intend to grow our reserves and production through development drilling, exploitation and exploration activities on our multi-year project inventory and through acquisitions that meet our strategic and financial objectives. As of June 30, 2009, Concho owned approximately 148,600 net acres of leasehold in our core operating areas of the Permian Basin. We have also acquired significant acreage positions in and are actively involved in drilling or participating in drilling in emerging plays located in the Permian Basin of Southeastern New Mexico and the Williston Basin in North Dakota, where we are applying horizontal drilling and advanced fracture stimulation technologies. Currently, the Company is operating fifteen drilling rigs, all in the Permian Basin; seven of these rigs are drilling Yeso wells in the New Mexico Permian, seven of these rigs are drilling Wolfberry wells in the Texas Permian, and one rig is drilling Lower Abo wells in New Mexico. Concho continues to seek opportunities to acquire, develop and exploit assets in the Permian Basin. For more information, please contact one of the following individuals: Matthew G. Hyde Greg Daggett VP Exploration & Land Land Manager Brent Robertso Katherine Chalfant Gary Mackay Robert Ready Greg Dove Jan Spradlin Stuart Dirks Gary Elander Doug Schmidt Joe Dutton Clay Whitehead Martie Gunter Fasken Tower II 550 West Texas Ave., Suite 100 Midland, TX, 79701 Phone: 432-683-7443 Fax: 432-683-7441 New Mexico Asset Texas Asset Exploration

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Graphic1PBLA TAKEOFF VOLUME 66 November 2009 ISSUE 55
Concho Resources Inc. is an independent oil and natural gas company engaged in the acquisition,
development, exploitation and exploration of oil and natural gas properties. The Company's operations,
which are headquartered in Midland, are focused in the Permian Basin of Southeast New Mexico and West
Texas.
Our operations are primarily concentrated in the Permian Basin, the largest onshore oil and gas
basin in the United States. The Company’s estimated mid-year 2009 net proved reserves were 154.5
MMBoe, which 99% of our total estimated net proved reserves were located in the Permian Basin and
consisted of approximately 65% crude oil and 35% natural gas. We intend to grow our reserves and
production through development drilling, exploitation and exploration activities on our multi-year project
inventory and through acquisitions that meet our strategic and financial objectives.
As of June 30, 2009, Concho owned approximately 148,600 net acres of leasehold in our core
operating areas of the Permian Basin. We have also acquired significant acreage positions in and are actively
involved in drilling or participating in drilling in emerging plays located in the Permian Basin of Southeastern
New Mexico and the Williston Basin in North Dakota, where we are applying horizontal drilling and
advanced fracture stimulation technologies.
Currently, the Company is operating fifteen drilling rigs, all in the Permian Basin; seven of these rigs
are drilling Yeso wells in the New Mexico Permian, seven of these rigs are drilling Wolfberry wells in the Texas
Permian, and one rig is drilling Lower Abo wells in New Mexico.
Concho continues to seek opportunities to acquire, develop and exploit assets in the Permian Basin.
For more information, please contact one of the following individuals:
Matthew G. Hyde Greg Daggett
VP Exploration & Land Land Manager
Brent Robertso Katherine Chalfant Gary Mackay
Robert Ready Greg Dove Jan Spradlin
Stuart Dirks Gary Elander Doug Schmidt
Joe Dutton
Clay Whitehead
Martie Gunter
Midland, TX, 79701
PBLA OFFICERS FORUM
MIDLAND, TEXAS 79701-4289
THEODORE M. KERR *
WILLIAM E. WRD
BRIAN T. MCLAUGHLIN
+ ALSO ADMITTED IN OKLAHOMA
Elliott & Waldron of Garden City Abstracts & Research Library w/full Property Indexes and
Document Records from Inception
Lea County, New Mexico ~ Eddy County, New Mexico Dickens County, Texas ~ Kent County, Texas
King County, Texas ~ Stonewall County, Texas And now Glasscock County, Texas
Trina S. Palafox
Midland, Texas 79701 (432) 687-3232
LYNCH, CHAPPELL & ALSUP A PROFESSIONAL CORPORATION
300 NORTH MARIENFELD
NOVEMBER PBLA MEETING
When: Tuesday, November10, 2009 Where: Petroleum Club of Midland Time: 11:30 am Cost: $20.00 Speaker: - President of Midland Memorial HospitalRussell Meyers
Greetings fellow PBLA members, and welcome from your 2 Vice President.
I have been a member of the PBLA since 1994, and will be serving you as the membership and directory officer for the 2009-2010 term. I would like to encourage all members to become involved in all the PBLA has to offer. Membership in the PBLA provides us the opportunity to meet other professionals, build rapport and discuss current issues in our industry.
It’s that time again, time to update the PBLA Directory. If you missed the opportunity to have your picture taken at one of our past luncheons and would like to provide a current head shot, please send to the PBLA’s P. O. Box 2292, Midland, Texas 79702, Attn: Mollie McAuliffe. Also, if you or your Company would like to advertise in the directory for the 2010 through 2012 run, please contact me at 432-687-3334, ext. 109.
nd
With the new Sheriff in town, we are currently underway on upgrading our Website (PBLA.org). The upgrade will hopefully allow us the ability to post our directory on-line, pay dues, schedule continuing education and much much more! Look for the new and improved website, in the near future. We would like to give a special “Thanks!” to Clayton Williams Energy, Inc. for lending a huge hand in upgrading our website.
Thank you, Dustin Pannell
Or
Remora Oil Company [email protected]
The part of my outside Land Practice that I have never given up is locating missing people and entities. It has become much more than a hobby and is a very satisfying element of my Land career.
When a Landman cannot find a missing person, he or she will typically try or which will link you to “address books.” If unsuccessful a Landman may stop at
this point. Successfully finding missing people takes a combination of skill, perseverance and luck. How many times does a Landman encounter an NPRI created in 1951 that happens to encompass a drillsite and must be ratified?
The first think a Landman should do is carefully read the instrument creating the interest and look for what I have defined as “forensic” clues which are typically overlooked. Most of the time I find pertinent information within the instrument that gives me a good start. With that information I begin my search.
Unlike a PI (private investigator) there are three online elements a Landman should use in combination with one another to finding missing people-Genealogy, PI and Land websites.
Genealogical websites can give you historical birth, death, marriage and divorce information. The most commonly used genealogy websites are , ,
, and . Each offers different information which can be beneficial in finding missing people.
Once you have determined that the missing person is living or who the person’s living heirs are try a PI website. These websites are difficult for a Landman to access because they only recognize certain professional licenses such as the State Bar or Real Estate Commission. As an aside, this is probably the only pro argument I can make for the licensing of Landmen. The better websites include ,
and . Finally, I use the county records in the county where the missing person was last known, rather than the
county where the acreage is located. I have accumulated links to local county government in virtually all 50 states, which grow everyday. I have over 350 links in Texas alone.
http://www.whitepages.com/ http://www.theultimates.com/white/
http://www.familysearch.org/ http://www.ancestry.com/ http://www.rootsweb.ancestry.com/ http://www.cyndislist.com
https://www.merlindata.com http://atxp.choicepoint.com/ http://www.accurint.com/
Please email or call if you find any websites that would be beneficial to Landmen.
Alan H. Morgan, CPL has a BBA in Petroleum Land Management and BA in Government from the
University of Texas at Austin. He served HAPL as President, 1990-1991 and was the 1988 HAPL
Outstanding Landman. He has been recognized with the AAPL 1988 Education Award, 1994 Special
Award and 2001 Landman of the Year. He is currently Vice President-Land at Access Exploration
Corp. Alan can be reached at (281) 980.6455 or [email protected]
PBLA AWARDS
“LESSONS FROM THE BARNETT SHALE”
The Potential Gas Committee said in late June that shale gas has increased the US resource base to more than 1,800 Tcf. Shale players are now more confident than ever that they are in the right business, while their executives and stock investment analysts proclaim that the "miracle" is that high capital costs combined with low gas prices somehow result in profit.
Since little is known about the commerciality of new shale plays like the Marcellus and Haynesville, I decided to see what could be learned from the robust production history of the Barnett Shale. What I found surprised me. Most reserve predictions based on hyperbolic production decline methods were too optimistic when compared with production performance. There is little correlation between Initial Production (IP) rates and Estimated Ultimate Recovery (EUR). Average well life is much shorter than predicted, and the volume of the commercially recoverable resource has been greatly overestimated. Core areas of the play do not have appreciably higher EURs than the play overall, and the EUR from horizontal wells is not significantly greater than from vertical wells.
The Barnett Shale was the first shale gas play to be commercially developed, and it is the standard of comparison for this play type. There are now almost 12,000 producing Barnett wells, of which two-thirds are horizontal and one-third are vertical. Cumulative gas production is 5.64 Tcf, of which 3.62 Tcf comes from horizontal wells and 2.02 Tcf from vertical wells.
In this column in November 2007, I projected EURs for almost 2,000 horizontal wells in the Barnett Shale. At that time, these were the only horizontal wells with enough production history to evaluate. Now, with two additional years of production, I updated and revised the decline curves for the same control set of 1,977 wells. The overall EUR decreased 32% from my previous estimate, and the average per-well EUR fell from 1.24 Bcf to 0.84 Bcf. The reason is clear: Most wells do not maintain the hyperbolic decline projection indicated from their first months or years of production. Pro duction rates commonly exhibit abrupt, catastrophic departures from hyperbolic decline as early as 12-18 months into production and, more commonly, in the fourth or fifth years for the control group.
Workovers and additional fracture stimulations may boost rates to previous levels but rarely restore a well to its initial decline trajectory. More often, a steep hyperbolic or exponential terminal decline follows attempts to remedy deteriorating performance. This observation casts doubt on the common practice of "group curve fitting" to predict EUR from early production in newer shale plays.
I decided to examine another common play evaluation technique: prediction of EUR from IP. I projected decline curves for all the horizontal wells in the Barnett, and the resulting cross-plot of IP versus EUR provided a broad range of EURs that might be associated with a particular IP. For example, the well with the highest EUR in the Barnett Shale (8.8 Bcf) has a good correlation with IP (7.94 MMcfd). The next-best well has a EUR of 8.6 Bcf and a poor correlation to an IP of 4.28 MMcfd, and the fourth-best well has a EUR of 7.1 Bcf and an even poorer correlation to the IP of 1.9 MMcfd. In the end, I would prefer a high IP to a low one but, since about half of the EUR is produced during the first year, a well's early decline rate is more important than IPin predicting reserves.
Operators often state that shale plays have about a 30-year production life. But I found that the average well life for hori- zontal wells is about 7.5 years, although the mode is 4 years. Many wells should have 8-12 years of production, but few will extend beyond 15 years.About 75% of predicted EUR in horizontal Barnett wells has been produced by year 5.
The average EUR for all horizontal Barnett wells is 0.81 Bcf (the mode is 0.5 Bcf/well). This is about one-third of the 2.5- Bcf/well average predicted by many operators. My decline projections indicate that only about 300 horizontal wells in the play (4% of total) will reach or exceed a 2.5-Bcf threshold. Focusing on the core areas or "sweet spots," the average EUR for wells in the Tarrant County core area is 1 Bcf, and 0.84 Bcf in the Johnson County core area.
The US Geological Survey estimates technically recoverable Barnett gas resources of 26 Tcf, which many operators believe is too low. My calculations suggest that Barnett EUR, based on 11,817 horizontal and vertical wells, will be about 8.8 Tcf. An additional 23,000 wells would be required to reach 26 Tcf, at a cost of over $75 billion for leasing, drilling and completion alone.
A final surprise is that horizontal wells do not have significantly higher EUR (0.81 Bcf) compared to vertical wells (0.62 Bcf). Horizontal completions only result in a 31% improvement in reserves for about 21/2 times the cost. Put another way, the nominal unit cost of gas from a horizontal well is about $4.30/Mcf compared to $2.05/Mcf from a vertical well.
When I state concerns about the economics of shale plays in the current low-price gas environment January 2009), operators sometimes dismiss them if they are hedged at higher gas prices. If every operator in the Barnett Shale was hedged at a netback gas price of $8/Mcf, 31% of horizontal wells would break even or make money. At $6/ Mcf, only 15% of wells would reach this commercial threshold.
I am troubled that public companies and investment analysts make fantastic claims about the rates and reserves for new shale plays without calibrating them to the only play that has significant production history. Almost every assumption used by the industry to support predictions about the Haynesville or Marcellus Shale plays is questionable based on well performance in the Barnett Shale. While the Barnett Shale does not perfectly predict what will happen in other plays, it seems reasonable to tem- per and calibrate our uncertainty with what is known. There are many lessons we can learn from the Barnett Shale, and they all suggest a cautious approach to developing new shale plays.
Reprinted with permission August 2009 issue”
(World Oil,
IHS provided information that was used in this evaluation. Their support of this column is greatly appreciated.
“ from World Oil,
By: Arthur Berman
PBLA NOTICE
We would like your suggestions for industry topics and/or concerns you would like to see addressed at out Spring Educational Seminar which is going to be held in the Spring -April 14, 2010. For instance, one idea proposed relates to horizontal land issues. You let us know and we will begin working on it! Send your suggestions to Ray McKim at
or Mollie at You can also drop a note in the suggestion box at the check-in table at the monthly lunch meetings.
******** Attention Former PBLA Board Members and Officers: The PBLA would like to consolidate any archives that former PBLAboard members and officers are currently storing in their homes, garages, offices, etc. If you have old PBLA paperwork, computer files, paper files, accounting files, or other types of archives, please contact Mollie at
.We would like to preserve as much PBLAhistory as possible and make it accessible to current and future officers and boards.
[email protected] [email protected]
NEW MEMBERS
Romae Bell
Tammy Friday
Concho Resources, Inc. 550 W. Texas, Suite 100 Midland, TX 79701 432.818.2203
Concho Resources, Inc. 550 W. Texas, Suite 100 Midland, TX 79701 432.818.2214
Matt Garner
Matt Johnson
Henry Resources, L.L.C. 3525 Andres Highway Midland, TX 79703 432.694.3000
Anadarko Petroleum Corp. 1201 Lake Robbins Drive The Woodlands, TX 77380 832.636.1215
Leslie Smith
Anadarko Petroleum Corp. 1201 Lake Robbins Drive The Woodlands, TX 77380 832.636.8698
“LANDMEN IN ACTION”
“Sara Solansky breaks a few clay birds at the recent
PBLA skeet shoot.”
AAPL will credit 6.5 continuing education credits.
In need of continuing Education credits? Many times a year, the at Midland College has special events or courses for C. E. credit.
For information:
Fall 2009 Courses at l or PPDC Upcoming Special Events at
PETROLEUM PROFESSIONAL
DEVELOPMENT CENTER
INKLE ENSLEY
HANOR ARTIN
(432) 683-4691 FAX: (432) 683-6518 www.hinklelaw.com
HAROLD L. HENSLEY WILLIAM B. BURFORD
STEVEN D. ARNOLD
JULIA JOPLIN SWALLOW JOSEPH A. BAKER
JOHN C. CHAMBERS (1933 - 2009) OTHER OFFICE LOCATION
Roswell, New Mexico Santa Fe, New Mexico
L OAW FFICES
M , T 79702-2796 (432) 687-0011
LLINOIS UITE
D H. S K F H
M L. S
ATRICK ERALD (1964-2007)
OHN AD AVIS
J C. P S E. G
S S. S S D. P J M. D O E. G
J O
ILL ENNINGTON
HANNON OSS
HAUN CHOTTMILLER
AM ATRANELLA
ACOB AVIDSON
MAR ALLARDO
ONI GLEJ.
STUBBEMAN, McRAE, SEALY,
LAUGHLIN & BROWDER, INC.
Attorneys at Law
Serving the Legal Needs of the Permian Basin for more than 70 years.
Two Fasken Center, Suite 800 550 West Texas Avenue Midland, Texas 79701
Telephone (432) 682-1616 Facsimile (432) 682-4884
SAFE LACEP of the Permian Basin
Dear Will,
Thank you so much for the generous gift from the PBLA. Your gift makes hope possible for families at Safe Place.
It has been a busy spring. This weekend a young family left the shelter after 2½ months. Sharon, a mother of 3 boys under age 5, came to Safe Place when her abusive husband left her alone for the day. Sharon had no identification for herself or her sons. She was unemployed and felt she had no job skills. Sharon’s advocate helped her obtain birth certificates for the boys and social security documentation for herself. The advocate contacted a partner agency which agreed to provide 2 weeks of day care at no charge so Sharon could apply for other social services and begin her job search.
Sharon has complicated legal issues regarding child support and visitation. Our legal advocate has guided her through the legal process and helped her find an attorney so she can proceed with a divorce.
During the family’s stay, Sharon attended group and individual counseling sessions.After one group session she wrote, “I gained confidence today! I recognize that even when discouraged I can still be happy and beautiful. I will SUCCEED!”
Sharon is succeeding - she has found a job and an apartment for her family. She plans to attend support group each week. Counseling and advocacy services remain available to her for as long as she needs them.
Thank you for the PBLA’s support of the Safe Place mission and families like Sharon’s. Your organization has helped change many lives for the better.
Best Regards, Nancy Betts Development Director
“The PBLAsupports local charities like Safe Place through its Danita Walker Charities Fund. Our 27th annual skeet shoot raised over $12,000 toward the PBLA Charity and Scholarship Funds. Your generous support of the PBLA Charities/Scholarship funds is greatly appreciated”
Keith Nelson
UPCOMING EVENTS PBLA 2009 - 2010
President
Immediate Past President
Secretary
Treasurer
Charles L. House
PBLA On Line http//www.pbla.org
If you are interested in publicizing your company in the Profile section of the Newsletter, or if you have any suggested topic for a Legal Update for upcoming Newsletters,
please contact Keith Nelson @ 432.682.9800.
NAME OF DIRECTORS
Permit # 86
2009-2010 PBLA
Director / Christmas Party
Director / Newsletter
Petroleum Fall Festival Midland, TX
PBLA Christmas Party KD’s Bar-B-Que
5:30 - 8:00