|GrayStone Exploration Labs, Inc.
The loss of "signal" around all six injectors
is clear, however, additionally, all four of
the structural highs measure higher soil iodine values after CO2
injections compared to the baseline survey.
GrayStone Exploration Labs, Inc.
|Geochemical Survey Statistical Analysis - NW Kansas
Northwest Kansas is typical of the western high plains. Ranching, dry land agriculture and occasional
center pivot irrigation account for most of the land use. Hydrocarbon production has been expanding west
from the central Kansas uplift for almost a century. Multiple zones are productive in this region with the
Pennsylvanian Lansing and Kansas City groups the primary targets.
Most of the surveys from this NW Kansas area were wildcat exploration surveys well beyond existing
production but a few were collected over existing fields. Although existing field surveys from other areas
have proven useful the data from LKC fields is not. Wells drilled within approximatly one mile from existing
production were not included in this evaluation and based on these surveys I no longer recommend
geochemical surveys over existing LKC production.
Wildcat exploration surveys begining in 2005 and continuing to the present have evaluated more than
32,000 acres and more than 40 separate survey areas. Currently (3/2018) there have been 78 new wells
drilled within these existing geochemical surveys. These new wells were separated into two groups,
prospective and dry based on the existing iodine survey data.
While compiling these data I noticed that the dry holes that were in the mildly anomalous areas were
much more likely to display hydrocarbon shows. This correlation provides an additional confirmation that
the iodine survey data is a direct reflection of the underlying hydrocarbons.
Twenty three of the 78 wells were assigned to the prospective group. The remaining 55 wells were
evaluated as dry holes. Thirteen of the 23 geochemically prospective wells were successful and have
produced more than 360,000 bbls of oil to date. This represents a 57% success rate. Additionally one of
the 10 unsuccessful wells was a ground water anomaly that would not be drilled today and at least five
other wells would no longer be considered prospective based on the lessons (size matters) of this
evaluation. Using this revised criteria only 16 of the 23 wells would have been selected as prospective.
This would have eliminated 6 dry holes and one producer and yielded 12 producers for 16 positive
predictions with a success rate of 75% and a total production to date of 340,000 bbls.
The 55 wells in the dry hole group produced 50 dry holes and 5 producers yielding a 91% dry prediction
success rate. The five successful wells have produced a total of 73,000 bbls to date. An additional 10
wells were completed. Seven of these wells are plugged, the 3 remaining wells will not reach break even.
The total production from these ten wells is 14,800 bbls to date.
|Positive Iodine Surveys: 13/23 57% Producers, 360,000 bbls 3/2018
|Negative Iodine Surveys: 50/55 91% Dry
Separating the two dry hole groups into a background group and a slightly anomalous group provides
additional confidence that iodine is quantitatively measuring hydrocarbons accumulations.
The no show dry hole group is a total of 24 of the 55 dry hole predictions. Fifteen wells were dry and
logged and tested no shows. Sixty three percent or 15/24 wells were dry with no shows. The remaining
31 dry hole predictions were tested at a far higher rate and yielded 21 show wells with three producers.
Seventy seven percent of these dry holes tested shows.
What does this all add up to? By putting some numbers to this group of wells the value of iodine surveys
will become obvious. Drilling a well in this area costs about $150,000/well. The total drilling costs for 78
wells would be, $11,700,000. Completion in this area is approximatly $250,000/well. Twenty nine wells were
completed for, $7,250,000. Total drilling and completion costs, $18,950,000. Total production to date from all
completed wells total 441,500 bbls. Using $55/barrel for this production would yield, $24,282,500. The 78
wells have produced a positive yield of 24,629,500 - 18,950,000 = $5,679,500. ROI 30%
Separating the two groups defined by the iodine surveys yields a group of wells that would be invested in
and a group that would be avoided. Of the 23 positive wells that were drilled we have: 23 X 150,000 =
$3,450,000, 14 completions: 14 X 250,000 = $3,500,000, TOTAL $6,950,000. Total production to date from
these wells is 360,000 X 55 = $19,800,000. 19,800,000 - 6,950,000 = $12,850,000. ROI 185%
There are 55 wells that would be avoided. Drilled: 55 X 150,000 = $8,250,000, Completed: 15 x 250,000 =
$3,750,000. TOTAL $12,000,000. Total production 87,800 X 55 = $4,829,000. 12,000,000 - 4,829,000 =
-7,171,000. ROI -60%
If all these wells were drilled by one company they would have made a small profit. Geochemistry was
able to turn a small profit into 185% ROI. Although a small number of productive accumulations will be
missed using this geochemical screen the elimination of large numbers of dry holes make this a fair trade
for the enhanced profits and success.