A new report by Wood Mackenzie examines the risks facing operators and investors from inaccurately estimating well decline rates in the Permian. While parallels can be drawn between the current boom and prior periods of intense Permian activity, investors and operators should be careful when basing decline rates of horizontal tight oil wells on data from vertical wells, warns a July report by Wood Mackenzie. The Permian has thousands of vertical wells that have been producing for decades, but the relative immaturity of the Wolfcamp compared to other zones means pure field data for horizontal tight-oil wells goes back just eight years. Because of this, proxy values based on decades-old data from vertical wells and other shale plays have often been used to determine tight-oil terminal decline rates. “The challenges of modeling tight well estimated ultimate recoveries (EURs) are growing and accurately selecting a representative terminal decline rate is […]