As part of a complete technical review process, INEXS creates a summary report that is a P50 most likely outcome focused on defining and implementing the highest value field operations to maximize cash flow, through the process of generating an independent risk weighted NPV-10 / Investment value for all non-producing future well operations – including Probable and Possible reserves.
INEXS provides complete technical project management, with teams that evaluate the technical data, deliver the summary report, with options to implement the drilling, production, abandonment and environmental operations, and deliver the results efficiently and cost effectively.
Gather all data supplied by restructuring client including digital shape files of lease position, type curves, and pre-existing studies, investor presentations, including maps, cross-sections, and geological analytical information specific to client’s assets. All data, reports and reserves estimation will be accepted at face value “as it is”, the short fuse on the project does not allow for QA/QC, revision or validation of data.
Will need NRI’s, lease expiration dates, LOE’s, pipeline contracts and basis differentials and PhDWin or Aries well files – can convert from either database as needed
Analyze proprietary and public production records of all surrounding wells todevelop type curves that are relevant to the client acreage position
Attempt to subset the acreage into logical grouping based on proximity to type curves and variability of type curves. These areas may be ring-fenced based on similar well performance (similar decline curves and reservoir setting).
Compare and contrast all existing type curve studies from client to public information
Determine well spacing and maximize potential well locations on acreage – if the client has already done this in their digital well database all the better
Review all drilling and completion actual costs supplied by client and compare to recent trends in the basin
Determine what variations – if any – to apply to those costs across the acreage position based on depth and pressure
Review all lease operating costs supplied by client and compare with publicinformation. These LOS/LOE’s together with well costs and production response may provide the elements for building an opex model and a matrix to estimate possible IRR’s and ROI’s.
Review all pipeline transportation agreements and contracts supplied by client to and contracts supplied by client to determine basis differentials and compare and augment with public information. Determine relevant pipeline capacities
Water production, SWD wells, and disposal costs
Oil and liquids production, transportation methods and costs
Apply these differentials to each well case
Remove all acreage that cannot be drilled within the lease expiration dates provided
Design a logical timeline for drilling and completion of acreage and apply that to the capital expenditures and start of production for each well. Typical drilling curves, NPT and drilling record would be beneficial on establishing the drilling sequence.
Estimate operational delays caused by weather and other factors and apply to the timeline
Build a complete valuation for each of the ring-fenced areas in terms of TYPE wells, and generate a PV-10 of the future value, based on the representative TYPE well decline curve.
Review existing studies from client
Build separate cases for different reservoirs across the acreage and summarize the valuation for the acreage for each reservoir
Determine from surrounding production the percentage of wells underperform based on mechanical, reservoir, or operational issues and apply that to the summary valuation
Assume that P&A is so far out in the future for each well that the PV-10 cost would be negligible
Develop project cash flow model
Generate the full valuation of the program on a per acre basis. Complemented by providing ranges of possible outcomes, building ranges to be sensitized using High/Low cases and using Monte Carlo simulation.
Develop a matrix comparing returns on investment to acreage value
Analyze recent acreage transactions and attempt to normalize to current market conditions
Compare the recent transactions to the matrix to determine a minimum, most likely and maximum value for the two acreage cases in the different reservoirs
Create maps comparing normalized values to geographic locations
Analyze any existing distressed sales to determine the valuation reduction and apply to that scenario for the report
Summarize results into a written report to the client