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8 min read

Texas Production Allocation – Case Study

Texas Production Allocation – Case Study

Allocating production from the lease level to the well level in the state of Texas can be a challenge. There are a limited number of hard data points and tons of unique cases to be considered. For better or worse, in order to utilize analytics we have to allocate the data to the well level. We provided a quick overview in our Texas Production Allocation Overview. Now we’ll step through an actual lease and watch as the process unfolds.

The lease we are looking at is the Hixon-Trout C Unit lease. If you want to pull the data from the RRC, the lease number is 17284 and the district is 01. This lease has a good sampling of several typical scenarios. The wells on this lease continue to produce, but we will be capping the data on this example to 8/2017. This is enough data to get a full picture of the process. Let’s get started.

The First Well

Many leases start with a single well. This is very useful because the lease and well data are the same. In this lease, the 1H well produces for several months before a second well comes online. Here is what that production looks like.

    1H
Report Date Lease Oil Known Oil Calculated Oil
9/1/13 4674 4674 4674
10/1/13 14183 14183 14183
11/1/13 9563 9563 9563
12/1/13 6095 6095 6095
1/1/14 4962 4962 4962
2/1/14 2652 2652 2652
3/1/14 2406 2406 2406
4/1/14 1905 1905 1905
5/1/14 3472 3472 3472

And Then…

The second well is completed on 6/1/2014. At the time of the completion, we have no additional data. Until we get more, we will just continue the decline on the 1H and give the new well what is left over from the lease production

1H   2H
Report Date Lease Oil Known Oil Decline Oil Calculated Oil Known Oil Calculated Oil
9/1/13 4674 4674 4674
10/1/13 14183 14183 14183 14183
11/1/13 9563 9563 9225.645925 9563
12/1/13 6095 6095 6303.645176 6095
1/1/14 4962 4962 4478.808481 4962
2/1/14 2652 2652 3285.084486 2652
3/1/14 2406 2406 2473.946854 2406
4/1/14 1905 1905 1905 1905
5/1/14 3472 3472 1495.045331 3472
6/1/14 1823 1192.748062 1193 630
7/1/14 1681 965.3209249 965 716
8/1/14 1701 791.1875713 791 910
9/1/14 1688 655.7734276 656 1032

Now Things Get Interesting

At this point in time, we get an influx of new data that we have to handle.

  1. The 2H well begins to be reported on the pending lease production export. This export is one of the only places individual well production is reported in the state of Texas. Wells only show on the pending lease production prior to being assigned to a lease. Therefore, the production we have allocated to 2H since it’s completion date must be removed. Then we need to apply the pending lease numbers as they are known values.
  2. The change in 2H means that we need to re-allocate the production back to the 1H well. It now gets 100% of the lease production prior to 10/1/14.
  3. Well 4H is completed on 10/18/14. This well also shows up on the pending lease production export. Another set of known values.
  4. Well 3H is completed on 10/21/14. This well does not show up on the pending lease production export. We will have to combine methods to calculate the production for the 3H.

First, let’s look at the pending lease values as those are known values

2H 4H
Report Date Lease Oil Known Oil Known Oil
10/1/14 4297 4029
11/1/14 30469 28085 1771
12/1/14 47513 16158 15379
1/1/15 21961 8264 6309
2/1/15 13721 5324 4104
3/1/15 12582 5144 3652

Now we can take the remaining production and allocate it to the other two wells. We do this be continuing the decline on the longest running well (1H) and applying the remainder to the 3H.

1H   3H
Report Date Lease Oil Known Values Decline Oil Calculated Oil Calculated Oil
10/1/14 4297 4029 192.5301215 193 75
11/1/14 30469 29856 138.3128645 138 475
12/1/14 47513 31537 99.36340529 99 15877
1/1/15 21961 14573 71.3822705 71 7317
2/1/15 13721 9428 51.28073588 51 4242
3/1/15 12582 8796 36.83987429 37 3749

Using Declines to Allocate

From here we lose all known values and have to rely exclusively on calculations. We’re in luck though because we have plenty of values to use on our decline curves. We will create decline curves for each well based on the values we have calculated. We will then take those values and assign each well a weight based on the decline value for the period. Finally we take that weight and apply it to the lease production number. This process allows us more accurately account for the movement in lease production and still stay true to the higher producing wells in the lease. Here is what the next nine months look like.

    1H   2H   3H   4H
Report Date Lease Oil Decline Oil Decline % Calculated Oil Decline Oil Decline % Calculated Oil Decline Oil Decline % Calculated Oil Decline Oil Decline % Calculated Oil
4/1/15 9093 26.46561744 0.29% 27 4091.45176 45.34% 4123 2484.018237 27.53% 2503 2421.179808 26.83% 2440
5/1/15 9392 19.01279307 0.25% 24 3358.983998 44.34% 4164 2125.43735 28.06% 2635 2072.017561 27.35% 2569
6/1/15 8399 13.65871403 0.21% 17 2824.524965 43.41% 3646 1857.323144 28.55% 2398 1810.869192 27.83% 2338
7/1/15 6902 9.812365194 0.17% 11 2420.098944 42.55% 2937 1649.274681 29.00% 2002 1608.18085 28.28% 1952
8/1/15 6911 7.049163669 0.14% 9 2105.121056 41.75% 2886 1483.140383 29.42% 2033 1446.298457 28.69% 1983
9/1/15 5849 5.064090813 0.11% 7 1853.999193 41.01% 2399 1347.413123 29.81% 1743 1314.026204 29.07% 1700
10/1/15 5811 3.638022461 0.09% 5 1649.868798 40.32% 2343 1234.444845 30.17% 1753 1203.920773 29.42% 1710
11/1/15 5070 2.613540696 0.07% 4 1481.205942 39.67% 2011 1138.953962 30.51% 1547 1110.840744 29.75% 1508
12/1/15 4695 1.877557119 0.05% 3 1339.892829 39.06% 1834 1057.175785 30.82% 1447 1031.120601 30.06% 1411
1/1/16 4812 1.348829479 0.04% 3 1220.061079 38.49% 1852 986.3544264 31.12% 1497 962.0766042 30.35% 1460

Here Comes Test Data

So why only the next nine months? Because in February of 2016, we again get some additional data. This time it comes in the form of test data. Test data is the only hard data point we have to work with once pending lease production is gone (if it was ever in the pending lease set). Typically we see new test records once a year at a minimum. Many times we get more than that. Once we have three test records, we can create a decline model of the test data. Each additional test data point beyond three will improve the accuracy of the model, so we’ll incorporate them as they come in for the life of the well. We will utilize a similar method to assign weights to each well based on the decline model we create from the test data. Creating the decline model on test data is not straight-forward, so we’ll detail that in a later post.

One other big point about generating the test decline model is that the model will now have reference values all the way back to the very first test. This means we will recalculate the production values based off of this model. This also means that we have to go back to the beginning to illustrate how this all comes together. Here is the final look at the lease.

      1H   2H   3H   4H
Report Date Lease Oil Known Oil Test Oil Test Decline Test Decline % Calculated Oil Known Oil Test Oil Test Decline Test Decline % Calculated Oil Known Oil Test Oil Test Decline Test Decline % Calculated Oil Known Oil Test Oil Test Decline Test Decline % Calculated Oil
9/1/13 4674 4674 4674
10/1/13 14183 14183 26691 26691.00 100.00% 14183
11/1/13 9563 9563 9842.29 100.00% 9563
12/1/13 6095 6095 5868.72 100.00% 6095
1/1/14 4962 4962 4129.52 100.00% 4962
2/1/14 2652 2652 3163.10 100.00% 2652
3/1/14 2406 2406 2551.55 100.00% 2406
4/1/14 1905 1905 2131.31 100.00% 1905
5/1/14 3472 3472 1825.58 100.00% 3472
6/1/14 1823 1593.64 100.00% 1823
7/1/14 1681 1411.94 100.00% 1681
8/1/14 1701 1265.94 100.00% 1701
9/1/14 1688 1146.18 100.00% 1688
10/1/14 4297 1046.25 100.00% 268 4029 4029
11/1/14 30469 961.67 2.61% 613 28085 35880 35880.00 97.39% 28085 1771 1771
12/1/14 47513 1023 889.20 1.10% 412 16158 18446.94 22.91% 16158 29171 29171.00 36.22% 15564 15379 32023 32023.00 39.77% 15379
1/1/15 21961 826.45 3.45% 699 8264 12414.90 51.79% 8264 6922.62 28.88% 6689 6309 3807.61 15.88% 6309
2/1/15 13721 771.61 4.14% 472 5324 9355.66 50.15% 5324 5506.78 29.52% 3821 4104 3022.95 16.20% 4104
3/1/15 12582 723.29 4.61% 446 5144 7506.04 47.86% 5144 4814.22 30.69% 3340 3652 2641.04 16.84% 3652
4/1/15 9093 680.42 4.96% 451 6267.04 45.67% 4153 4375.65 31.89% 2899 2399.65 17.49% 1590
5/1/15 9392 642.13 5.22% 491 5239 5379.13 43.69% 4103 3379 4062.90 33.00% 3099 3224 2227.70 18.09% 1699
6/1/15 8399 607.73 5.41% 454 4711.59 41.92% 3521 3823.91 34.02% 2857 2096.39 18.65% 1567
7/1/15 6902 576.68 5.55% 382 4191.44 40.33% 2784 3632.78 34.96% 2413 1991.42 19.16% 1323
8/1/15 6911 279 548.50 5.65% 390 3774.72 38.90% 2689 3474.91 35.81% 2475 1904.74 19.63% 1357
9/1/15 5849 522.84 5.73% 335 3433.37 37.61% 2200 3341.33 36.60% 2141 1831.42 20.06% 1173
10/1/15 5811 499.36 5.78% 336 3148.63 36.43% 2117 3226.18 37.33% 2169 1768.23 20.46% 1189
11/1/15 5070 477.81 5.81% 294 2907.51 35.36% 1793 3125.43 38.01% 1927 1712.94 20.83% 1056
12/1/15 4695 341 457.96 5.83% 274 2700.69 34.37% 1613 3036.18 38.63% 1814 1663.98 21.17% 994
1/1/16 4812 439.62 5.83% 281 2521.34 33.45% 1610 2015 2956.33 39.22% 1887 1620.18 21.50% 1034
2/1/16 4851 422.62 5.83% 283 2465 2364.33 32.60% 1582 2884.27 39.77% 1929 1829 1580.65 21.80% 1057
3/1/16 4518 406.83 5.82% 263 2225.72 31.81% 1437 2818.75 40.29% 1820 1544.72 22.08% 998
4/1/16 3871 392.13 5.80% 224 2102.47 31.08% 1203 2758.81 40.78% 1579 1511.85 22.35% 865
5/1/16 3897 434 378.41 5.77% 225 1992.15 30.39% 1184 1395 2703.67 41.24% 1607 1481.60 22.60% 881
6/1/16 3707 365.56 5.74% 213 1920 1892.83 29.74% 1102 2652.68 41.68% 1545 1453.65 22.84% 847
7/1/16 3902 353.53 5.71% 223 1802.95 29.13% 1137 2605.34 42.09% 1642 1427.68 23.07% 900
8/1/16 3814 342.22 5.68% 217 1721.21 28.55% 1089 2561.20 42.49% 1620 1302 1403.48 23.28% 888
9/1/16 3288 331.58 5.64% 186 1646.56 28.01% 921 2519.91 42.86% 1409 1380.84 23.49% 772
10/1/16 3523 321.56 5.60% 197 1578.12 27.49% 969 2481.16 43.22% 1523 1359.60 23.68% 834
11/1/16 3112 312.09 5.56% 173 1515.14 27.00% 840 2444.69 43.57% 1356 1339.60 23.87% 743
12/1/16 2834 303.14 5.52% 156 1457 1457.00 26.53% 752 2410.27 43.89% 1244 1320.73 24.05% 682
1/1/17 3007 294.67 5.48% 166 1403.15 26.09% 784 2377.71 44.21% 1329 1302.89 24.22% 728
2/1/17 2468 286.63 5.44% 134 1353.14 25.66% 633 2346.85 44.51% 1099 1285.96 24.39% 602
3/1/17 2576 279 279.00 5.39% 139 1306.58 25.26% 651 2263 2317.52 44.80% 1154 1240 1269.89 24.55% 632
4/1/17 2785 271.75 5.35% 149 1263.11 24.87% 693 2289.61 45.08% 1255 1254.59 24.70% 688
5/1/17 2761 264.84 5.31% 147 1222.44 24.50% 676 2263.00 45.35% 1252 1240.00 24.85% 686
6/1/17 2676 258.27 5.26% 141 1184.31 24.14% 646 2237.58 45.61% 1220 1226.07 24.99% 669
7/1/17 2881 251.99 5.22% 150 1148.48 23.80% 686 2213.27 45.86% 1321 1212.74 25.13% 724
8/1/17 2554 246.00 5.18% 133 1114.76 23.47% 599 2189.98 46.10% 1177 1199.97 25.26% 645

Here is a chart for the calculated production

Lease Production Allocation
Production curve for each well on the lease.

 

Conclusion

As you can tell from this example, our process is straightforward, logical, and effective. We are very happy with the finished product, but we know there is always room for improvement. If you have any feedback at all, please let us know.

 

 

 

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