Shale pioneer Chesapeake could file bankruptcy. FINALLY ! The consolidation begins

[Zhong Lu + 845]

CRK is buying Haynesville from CHK.  (oops just saw Maddox's post).  

Edited November 14, 2019 by Zhong Lu

[Zhong Lu + 845]

Well, CHK is trading at 70 cents again, so if you want it cheap this is your chance.  

Oh ho ho ho ho.  

[Jabbar + 465]

Comstock assistant to Jerry Jones said Haynesville could fetch over $1 Billion for Chesapeake.

Edited November 14, 2019 by Jabbar

[Gerry Maddoux + 3,627]

16 hours ago, Douglas Buckland said:

...they had primitive GPS and still managed to enter some large stratigraphic traps...

Perhaps someone can help me out here. I am an experienced ‘driller’, but I am confused when people mention GPS in regards to directional (?) drilling.

Is this some new technology above and beyond rotary steerable assemblies?

Any clarification would be appreciated.

You'd know better than I would, sir, but like the MWD gives real-time information to aid rotary steerable assemblies like the one you referenced, a trigonometric real-time measurement keeps one more to a predetermined drilling path, away from previous horizontal drill bores, in the dead center of narrow but oil-soaked shale, and prevents the inadvertent entry onto someone else's minerals. And just as the MWD tools give you minute information about gamma radiation and composition of the rock, GPS gives you minute information about precise location of the drill string. It's especially important in areas like the Delaware sub-basin. I know from your comments that you're not a huge fan of shale. Be that as it may, in the Delaware a certain individual or company may own say the Wolfcamp while another owns Bone Springs. Ring Energy, for instance, purchased only the San Andrus formation. They're drilling simple horizontal wells directly into that formation, which is not particularly thick but is prolific. They really can't waver from their stringline very much at all or they enter the Wolfcamp, which is what mighty Exxon and Chevron and Occidental are after. I'm not a driller, so you may find this the most laughable of all explanations. When I worked on a rig I was seventeen and things were dangerous and crude. Through the years, with the advent of 3-D seismography, it is my understanding that much more precise drilling can take place, that oil traps can be entered at the proper azimuth, and so on. If this makes no sense to you it won't hurt my feelings.

[Douglas Buckland + 6,308]

Unless I am missing something, this type of steering has been available for decades with the push-the-bit, point-the-bit and the hybrid rotary steerable systems.

These systems were originally developed to hit precise targets while drilling extended reach wells or complex 3D well paths, as well as to avoid other wells (anti-collision capability).

Nothing really new here although it will continually be improved and updated.

[Gerry Maddoux + 3,627]

4 hours ago, Douglas Buckland said:

Unless I am missing something, this type of steering has been available for decades with the push-the-bit, point-the-bit and the hybrid rotary steerable systems.

These systems were originally developed to hit precise targets while drilling extended reach wells or complex 3D well paths, as well as to avoid other wells (anti-collision capability).

Nothing really new here although it will continually be improved and updated.

You're probably right. But the kids who do this today literally adjust the angle of the drill bit by a computer, using a very sophisticated GPS to precisely pinpoint the location of the bit. That has been around for some time, but man it's precise these days. In fact, using it in conjunction with MWD tools, forming algorithms as it goes, I suspect this has improved tailored well performance in the shale basins fully as much as hydraulic fracturing in the completion of the well. These more precise GPS computer tools have cut days off drill time, especially when there's variation in lithological facies. Maybe this is just a refinement of technique, but in the shale, drilling times have dropped dramatically. I'm as dumb as a stump about this--and certainly have no business trying to explain it--but the young people tell me that these abbreviated drilling times are due to a combination of MWD and GPS. As I'm a natural Luddite, they could be blowing smoke up my behind and I'd buy it. I'm sorry: that's all I've got. But to watch them is a magical experience (almost enough to make you believe in shale). 😀 

[Douglas Buckland + 6,308]

Actually, the computer does not control the action at the bit. The bit’s position, azimuth and inclination data is sent in the form of pulses through the drilling fluid column by a pulser unit in the bottomhole assembly. This data is deciphered by the MWD computer. Instructions are then pulsed back to the bit.

An impressive bit of kit, but expensive. You still require a switched on directional driller at the surface as it is not like driving a car through rock. Reaction torque and gravity are always at work and formation changes require attention.

Furthermore, bit selection is critical and is highly dependent on which rotary steerable system you are using (gauge length and gauge cutting structures are different for point-the-bit or push-the-bit systems.

[Gerry Maddoux + 3,627]

11 hours ago, Douglas Buckland said:

Actually, the computer does not control the action at the bit. The bit’s position, azimuth and inclination data is sent in the form of pulses through the drilling fluid column by a pulser unit in the bottomhole assembly. This data is deciphered by the MWD computer. Instructions are then pulsed back to the bit.

An impressive bit of kit, but expensive. You still require a switched on directional driller at the surface as it is not like driving a car through rock. Reaction torque and gravity are always at work and formation changes require attention.

Furthermore, bit selection is critical and is highly dependent on which rotary steerable system you are using (gauge length and gauge cutting structures are different for point-the-bit or push-the-bit systems.

Last thing I'd do is demean the importance of the man responsible for the bit. Just pointing out, probably needlessly to a gentleman with your work experience, that the simultaneous computer handling of all those MWD and GPS functions has dramatically reduced the time and expense of drilling in shale, and with greater productivity. It is true that necessity is the mother of invention, because quite a bit of this was refined during the crash of 2014-2016. In a complicated geological oil and gas trap like the Hogshooter formation--with massive slabs of upended granite causing a need to work at odd angles--I have no idea whether or not GPS would add anything to the available 3-D seismograph. That area is of personal interest to me, came up only because of this thread on Chesapeake's certain demise, and I made a statement that all those good wells were drilled before the age of very good MWD and GPS. Since the major companies moved west about thirty miles, over into Wheeler County Texas where there's not much granite, I would presume that the granite traps weren't enticing enough, or produced too much of a barrier, to keep drilling out the Hogshooter. This was a real jump-starter for Chesapeake, Beckham County Oklahoma was, and they would have been well-advised to just stick to their knitting. The pull of the Haynesville was just too alluring.

[Douglas Buckland + 6,308]

I guess what I’m getting at is that this directional drilling, steerable technology was available long before shale oil became a big issue. Think about those poor sods drilling development wells offshore, from a 50 slot platform to targets all over the place AND having to deal with anti-collision issues.

Secondly, I keep seeing GPS in relation to directional drilling...is this the Global Positioning System? If so, how is the bottomhole assembly communicating with satellites through thousands of feet of rock?

[Guest]

19 hours ago, Douglas Buckland said:

The bit’s position, azimuth and inclination data is sent in the form of pulses through the drilling fluid column by a pulser unit in the bottomhole assembly. This data is deciphered by the MWD computer. Instructions are then pulsed back to the bit.

 

Well duh, who didn't know that? 

[Gerry Maddoux + 3,627]

I'm a bit out of my comfort zone, to be honest. I probably should have kept my mouth shut. My poor knowledge came to me too fast for me to put it all together. SRC Energy drilled a 12-well pad that I have a small interest in, and they did so in record time. They operate in the D-J Basin, the Niobrara, which is chalky and quickly penetrated anyway, but they did so fairly close to forbidden zones (as you're probably aware, Colorado has recently made drilling difficult, even in Weld county where drilling rigs preceded residential areas by a number of years). In the presentation, they described trajectory control algorithms and machine learning by digital technology. Incorporated in their system was GPS, whose satellites were obviously not picking up signals from the sensors in the cutting assembly but a topographical marker. I didn't bother to question all that, as I was most fascinated by their record time of drilling, using one of the new steerable systems--this one I think by Schlumberger. Anyway, whatever they did, the fastest well they drilled, from my notes, was in 29 bottom hours shoe to shoe, vertical, curve and lateral--a total of 15,000 feet. On pain of death, I cannot tell you how they incorporate the surface GPS with their MWD steering system. For that I'm afraid you're going to have to communicate with someone who actually has hands-on experience. My guess would be that they used it to make sure the drill bit was the mandated distance from the nearest body of water or residential structure. Perhaps I initially misspoke and GPS isn't used at all in HDD. Hereafter, I'll stick to subjects that I know incontrovertibly.

[Douglas Buckland + 6,308]

“I’ll stick to subjects that I know incontrovertibly.”

Gerry, don’t worry about it. I am (or was 😖) paid to know this stuff. When GPS was mentioned it caught me by surprise and if it was being incorporated I’d have to study up on it!

Keep posting even if you are NOT a wizard on a particular topic....it keeps us on our toes!

[El Nikko + 2,145]

On 11/14/2019 at 9:05 PM, Gerry Maddoux said:

You'd know better than I would, sir, but like the MWD gives real-time information to aid rotary steerable assemblies like the one you referenced, a trigonometric real-time measurement keeps one more to a predetermined drilling path, away from previous horizontal drill bores, in the dead center of narrow but oil-soaked shale, and prevents the inadvertent entry onto someone else's minerals. And just as the MWD tools give you minute information about gamma radiation and composition of the rock, GPS gives you minute information about precise location of the drill string. It's especially important in areas like the Delaware sub-basin. I know from your comments that you're not a huge fan of shale. Be that as it may, in the Delaware a certain individual or company may own say the Wolfcamp while another owns Bone Springs. Ring Energy, for instance, purchased only the San Andrus formation. They're drilling simple horizontal wells directly into that formation, which is not particularly thick but is prolific. They really can't waver from their stringline very much at all or they enter the Wolfcamp, which is what mighty Exxon and Chevron and Occidental are after. I'm not a driller, so you may find this the most laughable of all explanations. When I worked on a rig I was seventeen and things were dangerous and crude. Through the years, with the advent of 3-D seismography, it is my understanding that much more precise drilling can take place, that oil traps can be entered at the proper azimuth, and so on. If this makes no sense to you it won't hurt my feelings.

Actually this is quite interesting as I've also seen people reference 'GPS' and was wondering what it meant...like Doug.

It's interesting how people in the same industry (but also in a different part of it maybe) describe what other people do, and I'm the same learning how the financial side of things works and affects my own job and likelyhood of work.

This thread alone was worth joining this forum, it's been fascinating 

[Gerry Maddoux + 3,627]

On 11/15/2019 at 7:40 PM, Douglas Buckland said:

“I’ll stick to subjects that I know incontrovertibly.”

Gerry, don’t worry about it. I am (or was 😖) paid to know this stuff. When GPS was mentioned it caught me by surprise and if it was being incorporated I’d have to study up on it!

Keep posting even if you are NOT a wizard on a particular topic....it keeps us on our toes!

Many decades ago I enrolled myself in the lifelong learning process. Shortly after I did that I realized that you don't learn if you don't stick your foot in your mouth once in a while. I have made a steady practice of doing that, and in the process I have learned a great deal from people like the ones on this oilprice site. I don't say anything to try to impress people but have been known to shoot from the hip, so when you put me on the spot and make me try to defend something I've said, man, for me it's another chance to keep my aging brain engaged. I have been intrigued with oil and gas since the first deep well in Oklahoma was drilled on my grandfather's land when I was six years old. He'd walk me around his screened in porch, pointing out the well bores: Devonian, Mississippian, Permian, etc. I pursued another line of work, something I was better qualified for and which gave me a satisfying career. Then after forced retirement for illness, I decided to reinvent myself. I had read the classics, visited most of the museums I wanted to see, and so I found myself gravitating back to oil and gas--driven there by some primordial force from my formative years. That has proven to be a tremendous mistake for my mental health, as it occurred right in the big-assed middle of the meanest, longest crash in world history (I think). But here I am anyway, taking a crack at something I have superficial knowledge about. It beats going into an assisted living facility.  

[JoMack + 547]

I'm surprised it took this long for Chesapeake to file for Chapter 11.  Most other oil companies don't like them and won't work with them since they are not very reliable in keeping their word.  Just my opinion.

[Rhino + 7]

have they formally declared ? I remember one well they drilled in Louisiana years ago.  They were on their 7 th sidetrack for a fairly small target.  It was absolutely crazy.  Most people would have walked away.  The engineers bonus were obviously incentivized on production rather than making money.

[Rhino + 7]

Sam Zell, another NYC real estate billionaire, is also buying shale gas assets.  His nickname is the grave digger for buying stuff when nobody wants them and he can negotiate a killer price.

Btw, does anybody know how to buy a production interest in operating oil or gas well?  Is it expensive?  Guess it is better to buy into a royalty trust or some fund that buys operating oil wells.  Curious how that is done.

[El Nikko + 2,145]

1 hour ago, Rhino said:

have they formally declared ? I remember one well they drilled in Louisiana years ago.  They were on their 7 th sidetrack for a fairly small target.  It was absolutely crazy.  Most people would have walked away.  The engineers bonus were obviously incentivized on production rather than making money.

I think oil companies get fined for not drilling the entire well to TD and/or lose tax credits for being out of the target formation.