What can Impact Drilling Schedules
At Midwest, we communicate reasonable expectations to our clients. While one transaction may look similar to another in the amount of funds raised, each transaction is unique. Each lease that is acquired has its own specific drilling opportunities associated with it requiring an individual plan set on developing the lease and targeting the potential producing zones.
All drilling schedules can be impacted by the following challenges:
- Significant rain can cause delays due to muddy farm fields which can be damaged by the significant amount of equipment that is needed to be taken into each drilling site.
- Local “Frost Laws”
- From January 15th to April 15th road restrictions take effect in areas where we drill, limiting our ability to transport heavy drilling equipment to the drilling site.
- Permitting for each new well requires significant planning by the operator causing them to give the state specific information as to where the well will be located, the total depth that it will be drilled, etc. Often the state reviewing the application will require additional information of the operator or be slow in processing the permit due to a large amount of permit requests.
- Rig Availability
- The amount of drilling rigs in the Illinois Basin are limited to a small number of operators. Due to strong demand currently, especially for horizontal drilling, there is usually a waiting time required to obtain a rig. The operator must be able to plan their drilling schedule based on the expected time they will receive a permit as they will lose the rig to another operator if they don’t have the permit when the rig becomes available.
- Operational Results
- A geologist has a general idea how to develop a lease but the results of a new well usually drives subsequent drilling efforts. Some of the results that may alter the initial drilling schedule could be a dry hole, a new producing zone that was not expected, or a significant producing well. Depending on the size of the lease, the dry hole may cancel any future drilling planned for the lease. Finding a new producing zone may require the operator to change their subsequent drilling permit applications to include this zone (usually to drill deeper). A significant well, while highly valued, may delay future drilling to allow for the leasing of adjoining ground that may also be part of the same highly productive zone.
- Production Results
- Future drilling, especially in planned offset wells, may be delayed by several months to monitor the results of the initial well to confirm that production is at the expected level.
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