Monday, July 14, 2014

Beech Grove 94H-1 Results

Due to the volatility in trading, I delayed making any comments regarding Goodrich's Beech Grove 94H-1 well results.  A week ago, Goodrich released an IP of 740 boepd.  My prior post laid the foundation for a discussion on the geological parameters and their impact on production performance.  I do not know any of the details on the drill and completion of the Beech Grove 94H-1.  The press release indicates that the lateral length was 6000' and the lateral landed in the lower part of the TMS.  Assuming that everything went well and the completion recipe was consistent with the last six wells, I would have expected ~1000 boepd for an initial test.  If that were the case, then one must analyze the location and determine what geological parameter(s) was different (25% off expectation).  Despite the fact that Devon released photographs of natural fractures in conventional core from 15500', the financial gurus are trying to pin the Beech Grove results on the deeper depth stating that fractures don't exist in the deeper parts of the play. I believe that Goodrich's SLC 81H-1 will prove that to be false.

At the Infocast TMS Summit last month, I presented some geological interpretations indicating "axes" that exist across this trend in not only the TMS, but also the Tuscaloosa sands below and above, and the Austin Chalk.  These axes represent both dip-trending sediment source fairways along with strike-trending "current reworked" fairways.  Lithology, facies, porosity, permeability, and natural fractures might have slight (~10-25%) variability in some areas due to the proximity to the axis. These won't present huge variability, but might be a factor of 100 MBOE per well in some cases.  The Beech Grove lies south of a dip-trending axis in an area that exhibits "thinner" pay.  Just north is the Devon Richland Plantation 74H-1 that had respectable results for a well that only used 92000 pounds of proppant per stage.

I look forward to the Goodrich SLC 81H-1 results. As mentioned prior, this well is thicker than the Beech Grove.  Offset wells have calculated pay thicknesses of: 114', 122', 128', and 174'.  It is located at a nice intersection of "axes" which should present some nice natural fractures.  This will be the first real test of the Washita Basin. I believe that we'll see some exciting results.