Accurately Evaluate Acreage to Lease or Buy  in the Unconventional Oil and Gas Fields
Data Science & Analytics

Accurately Evaluate Acreage to Lease or Buy in the Unconventional Oil and Gas Fields

Rosemary Jackson  •  

Q: How can help me evaluate new acreage to lease or buy?

A: With oil prices above $95 a barrel, shale drilling is returning to pre-pandemic levels. This time “the surge is being driven by private operators…with increased access to financing…and backed by private equity or family money.” 

“Like any other investment decision,” Dr. Brendon Hall, VP of Geoscience, begins, “buying land in the shale fields comes down to what the predicted returns are from this investment. We’re going to spend this much money; how much am I going to get back? And how confident am I in this number?Being able to quantify those things accurately is at the heart of understanding the risk.

oil prices

“When you’ve found something to buy or lease, how do you know if it’s a good investment or not?” Kyle LaMotta, VP of Analytics continues. " takes into account lots of different data types that we’ve talked about in other blogs in the past, creating that geomechanical model and bringing that all the way to the economics.

“The hardest part is to know if the predictions are good, are they accurate? That’s the risk side of it. will make blind predictions on wells that are similar to what the operator might be wanting to buy or lease. The operator can see how we would predict a well that’s actually producing, even if we don’t have the production data for that well.

“The operator can look at things such as, is this a single well that’s been bounded by a parent that’s been producing for a couple years. Is it in a new interval? Is it in an interval that we’ve developed in the past and we can see how other wells have performed in those targets?

The operator can further ask, what’s the completion strategy?How much proppant are they going to pump? How many stages are they going to run?

Taking all those considerations into account, we can get to the output which is ultimately the economic comparison of future cash flows today and the future discounted cash flows versus what price they’d be willing to pay for it.That’s the ultimate answer, but then you can get to how good is the prediction by looking at these analog pads in the area. What is able to do very well, is to build a model that allows you to run those different scenarios very quickly.”

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