They have @plough - in the drill plan filed with COGCC.
It's not a lateral as typcially used to mean a Horizontal well - its a deviated vertical. So you have the TVD (True Vertical Depth) and MD (Measured Depth). MD is the depth along the well bore .... so it will be longer than the TVD because the well is not vertical.
What's important (usually) is the stimulated rock volume. Again in this case there is no fracturing necessary and the reason for being deviated well is to increase the chance of intersecting more of the natural fractures.
Back in May 2014, AKK described the Pierre fractures as "Hydrocarbon production from the Pierre formation is believed to be from natural fractures ... the fractures are irregular in shapes and sizes .... 200ft in length .... 1,000 in width ... drive mechanism is known to be gravity drainage..."
Back in Dec 2014, when AKK was discussing its 2015 drill plan for the Pierre "The Pierre formation is a naturally fractured shale found at shallow depths of approximately 4,000 ft. These wells are drilled tangentially into the formation and do not require hydraulic fracturing, therefore the cost to drill and complete these wells is generally less than $1 million per well."
What has changed?
1. Pretty sure the rocks haven't, even though its been a couple of years
2. Possibly their targeting has improved via 3D seismic and thus GCOS.
3, The stated D&C costs have changed - but of course understand in what way because will that D&C cost of $500K/well stand up in development mode (i.e. who will do the drilling then?)
Another way of measuring cost is by the lateral foot and by how many feet get drilled per day.
$500k and 4,000 feet = $125/ft
$5M and 10,000 feet = $500/ft and in 13.4 days its about 750 ft a day (that matters when you pay for drilling services)
You could also compare the EUR
Pierre P50 = 55 MBO
e.g. Bakken = 550 MBO (converted from BOE so we compare only oil)
You could call that a wash on EUR but I given AKK plenty of benefit of the doubt.
In the end, it will come down to actual Net Income (not operating cash flow) over the development time horizon. Always does.
AKK Price at posting:
0.6¢ Sentiment: None Disclosure: Not Held
