Wednesday, August 25, 2010

Goodrich Not Sold on Restricted Choke

In a recent presentation, Goodrich Petroleum said that the company has looked at restricting choke sizes on its Haynesville wells to improve ultimate recovery.  While the company sees some benefits to the technique, it will not apply the technique widely across all of its completions.  Specifically, the company will not restrict chokes on higher initial production wells.  The company feels that the time it takes to recapture lost production from lower IP rates is close to two years and is not worth the loss in present value cash flow.

Management stated plainly that it is less interested in EURs than it is in rate of return and cash flow.  This is a choice each producer must make and the decision is especially important in times of low commodity prices like these.  I view this as  short-sighted.  It benefits the company in the short run because Goodrich can maximize it production to pay its bills.  But the company (and land owner) might be harmed in the long run if the ultimate productivity of the well is compromised by short-term decisions.  I don't mean to slam Goodrich, but the company is heavily natural gas dependent and has to make decisions in the best interest of the company's survival.

The company noted that it is using two nearby completions, the Wayne Bryan #3 (#240342), which has a higher IP rate and is flowing on a 22/64" choke, and the Wayne Bryan #4 (#240547), which has a lower IP rate and is flowing on a 16/64" choke, as a live action case study to help draw these conclusions.  Goodrich is not dismissing restricted chokes, but the company feels that they are better for lower rate wells.

I was interested to see that at the same conference Petrohawk claimed that the catchup rate for its restricted choke wells is closer to one year than the two years Goodrich cited.

1 comment:

Anonymous said...

Jump 1 year into the future and now GDP is a big advocate of choking wells. I admire companies that can quickly admit and learn from their mistakes. As we are still in the early stages of the learning curve for the various shales it is important not to be stuborn to new data.