A Little Housekeeping
It's really tempting to be the 'first' one to catch a trend change, that temptation is made all the worse by the ambiguous standard for knowing when the trend has really changed or if it's just noise. Our headline last week concluding that CHK had ‘added back crews’ was premature. It’s possible that they are just averaging over the quarter and until we see what they do between now and the end of June it's impossible to conclude this. I want SynMax to be above the sensationalism which is pervasive in our industry. We missed the mark this time, regardless of if that conclusion ends up being correct.
To be clear, there is no additional data on this matter that would indicate either outcome. At this point both sides could be argued persuasively.
Now back to the report.
Why Thermal Imagery?
If you have been following our TIL reports you know that we have had difficulty confirming the production status of newly completed wells in the NorthEast. In the Haynesville private investigators have in every case been able to legally inspect wells in person. In the Northeast wells are fenced with tall opaque barriers, adorned with ‘no trespassing’ signs and in some cases even have guards. We decided on a different approach.
Gas, and everything else, coming from deep underground is hot, usually between 140 and 500 degrees fahrenheit. Furthermore the various equipment on site generates heat when in use. To test our theory that heat signatures could be used in determining well status we selected 15 control wells with known production status as confirmed by state data and surveyed them with thermal drones along with other recently completed wells of unknown status.
This is a lengthy report, and so we decided to split it up. This first report will cover the results of our testing on control wells with known producing status and the results of CHK wells with previously unknown status. Our next report will dive deeper into the NYT progression and possible future path.
The Control Wells
Control Wellpad 453480 - Four Wells
According to state data this wellpad was not producing as of the latest data. Likewise we did not observe and heat signatures above the air temperature as of the time of the flight. Furthermore satellite images did not show any post completion activity or frac tanks (commonly used in flowback) since the end of February, the last available month of state production data.
Control Wellpad 470854 - Three Wells
This wellpad contained one legacy well flowing since 2012, in the image above it is the rightmost well with three newly completed wells on the left. The flow line from all four wells shows a heat signature above air temperature. Historical satellite images show frac tanks adjacent to the new wells following completion and state data shows the new wells producing as of the latest records through February.
Additional heat signatures were observed on each of the water separators.
Control Wellpad 471418 - Three Wells
State data shows all five wells, two legacy and three new, flowing. While the flow lines are wrapped in insulation we still captured higher than air temperature signatures on the new wells. Additionally frac tanks are still on site and satellite images show post completion activity. The water separators also show heat signatures.
Control Wellpad 467132 - Three Wells
Strong heat signatures on the wells and water separators, post completion activity observed in satellite images and historical images with frac tanks on site all match the state records which show these wells producing.
Control Wellpad 467452 - Two Wells
State records show all wells flowing, the above image, which is missing labels, shows heat signatures on flow lines from all wells despite insulation. Post completion activity is inconclusive but frac tanks indicate flow back.
Non-Control Wells
Using the methodology derived from the control wells we have established a production status for CHKs other wells where state data is not yet available. The key indicators for our determination were:
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Observations of post completion activity.
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Observations of Frac Tanks on site.
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Heat signatures on flow-lines and water separators.
We do not always observe post completion activity due to gaps in satellite images. Also, post completion activity is not on its own an indicator of production, activity like drilling out plugs can occur even when a well is not TILd. Frac tanks and heat signatures are far more reliable indicators of status in our view. Regardless, we use all three indicators to form our view of the most likely status of each well.
Wellpad 474986 - Four Wells (Not Producing)
Wells are not connected to anything. No water separators or frac tanks on site.
Wellpad 478923 - Two Wells (Not Producing)
These wells were completed 4/10/24. Onsite activity, but not producing.
Wellpad 476586 - Four Wells (Not Producing)
These wells are not connected to production equipment. No post completion activity has been observed. No frac tanks have visited the wellpad and there is no heat signature.
Wellpad 478263 - Four Wells (Not Producing)
Remember, the color of the image is relative so the flow line may look hot but it is actually cooler than ambient air temperature. We have observed post completion activity on this site which lasted at most 10 days but believe this was a frac plug drilling job. We have not observed frac tanks and do not believe these wells are producing. Assuming we are correct this wellpad is a prime candidate to be brought online quickly.
Wellpad 478279 - Three Wells (Not Producing)
These wells are not connected to production equipment and have no heat signature.
Wellpad 474699 - Three Wells (Not Producing)
There was a significant amount of post completion activity on this site but no frac tanks that we could see and no heat signatures on the flow lines or water separators.
Wellpad 466672 - Three Wells (TIL in Progress)
Frac tanks are on site and heat signatures show they are in use. These wells are being brought into production.
Wellpad 471880 - Three Wells (TIL in Progress)
This wellpad is also early in the TIL process with active frac tanks on site showing heat signatures of being in use and sand separators connected to each wellhead. These wells are being brought into production.
Summary Results
Expect a second report with analysis soon.
