One Man's Junk Is Another Man's Treasure
This little well is 50 years old this month. So, in honor of her birthday she got a bath and a complete make-over recently. She is located in a 40 acre pooled unit that has three mineral owners in it, including the local school district and a very rural, Baptist church whose congregation spans four generations. The well and tank battery are actually located behind the church.
In 50 years this well has made 70,000 BO and last month, July 2019, it's total return on original investment was 31:1. Around my shop we don't bother with NPV, or EBITDA or other hooey; we like to keep is straight and simple...31:1 ROI means its paid back drilling and completion costs 31 times. It still makes a little less than 3 BOPD and that equates to about a 7.0% annual rate of return, pre tax. Thanks to some awesome water drive it stopped declining 20 years ago. It's got an amazing looking plug back in it up-hole which I am saving for my old age. It's not sexy, folks don't Tweet about it, or cluck about it on Seeking Alpha; Rystad would not know how to analyze this well if it had to. But its a damn good well...way more profitable than any stinking shale oil well that will ever be drilled in America.
I finished building the firewall around the tank battery yesterday, re-stretched the fence around it and put new signs up; so now she is all spruced up again and has her 'Sunday-go-to-church-clothes-on.' It was 104 degrees when I left the location and did not get back to the office until almost five. Everybody had gone home already. The price of oil had fallen a dollar a barrel thru the day, the stock market had cratered, the IEA was yacking about how much more Permian Basin unconventional production was going to grow in the next 3 years, some dude with frizzy hair is going to get an Oscar for a stupid Nike commercial and Trump announced another bail-out for farmers who have been hit hard by his trade war with China. Good grief.
So, I went home, had a few cold beers, Ms. Catherine helped dig the dirt out of my ears; I showered and was asleep by 8:30. I slept like a baby. No bank owns me and I don't have to lie to anybody about how good all my wells are. I don't work in Saudi America, I work 24/7 in the Texas oilfield, rain or shine, and make money the old fashion way. I like it like that.