Old Oil Wells Deserve a Chance Too

The stats are compelling with respect to the amount of oil left in the ground after primary recovery. Some say, up to eighty percent of the oil is still left in the ground after the old pump jack moves up and down over many years. So are old fields worth taking a look at or are you better off just drilling a new well?

My experiences thus far in Kentucky and Illinois have been positive. The benefits of picking up an old well that is producing a small amount or a field with many shut in wells is that it often can be a value proposition. The problem with old wells is that you never know what the true conditions are down hole until you start cleaning it out. Buying a shut in well reminds me of purchasing a used car. Everything goes great until the transmission falls out and you have to decide what to do.

For example, I recently started converting a well to a waste water injection well. After purchasing new tubing and a special size packer, we determined that there was a hole in the casing. We had budgeted a certain amount for this project and this will take us over budget by $5-7K. As the operator of old wells, this is often the case and you can not allow it to get your spirits down.

On the flip side, we have stimulated wells within budget and the subsequent production was a multiple of what our expectations were. Many old wells did not have good records recorded, especially in KY, therefore positive surprises can pop up often. Remember, many old stripper wells were shut in during times when oil was in the basement and not worth producing.

It comes down to expectations when looking at a recompletion or work over oil deal. Do not be fooled by the promoters using big production numbers in their proforma projections. Research local production averages and understand the geology of the formations before investing. Also, make sure the operator has a track record with respect to working with old wells in the area.