A Tennessee farm out is a type of agreement between two or more companies involved in the oil and gas industry, where one company (the armor) grants the rights to explore and develop a specific area of land to another company (the farmer) in exchange for certain benefits. In this case, the focus is on farm outs related to horizontal wells in Tennessee. Horizontal wells in Tennessee are a specific type of drilling technique used in the extraction of oil and gas resources. Unlike traditional vertical wells, horizontal wells are drilled vertically to a certain depth and then turned horizontally to follow the layer containing the targeted resources. This allows for increased contact with the reservoir, maximizing production and efficiency. Keywords: Tennessee, farm out, horizontal wells, drilling technique, oil and gas industry, exploration, development, extraction, resources, reservoir, production, efficiency. There are several types of Tennessee farm out arrangements related to horizontal wells, including: 1. Joint Venture Farm out: In this type of farm out, multiple companies join forces to pool their resources and expertise in exploring and developing horizontal wells in Tennessee. Each company contributes a specific amount of capital, expertise, or land access in return for a percentage of the production and profits. 2. Working Interest Farm out: In a working interest farm out, one company (the farmer) acquires a percentage of ownership in the horizontal well project from another company (the armor). The farmer is responsible for covering a portion of the exploration and development costs and then receives a corresponding share of the produced oil and gas. 3. Leasehold Farm out: A leasehold farm out involves the transfer of lease rights from one company to another. The farmer gains the right to explore and develop horizontal wells on the leased land, typically in exchange for a cash bonus upfront or a commitment to drill a certain number of wells. 4. Technical Farm out: In this type of farm out, the farmer gains access to the armor's drilling and completion techniques, technologies, or specialized knowledge related to horizontal wells in Tennessee. The farmer may pay a fee or royalty to the armor for the use of their technical expertise. 5. Acreage Farm out: An acreage farm out refers to the transfer of a specific acreage or block of land from the armor to the farmer. The farmer assumes the responsibility of exploring and developing horizontal wells within the designated acreage, with the armor retaining a stake in the potential production and profits. These different types of Tennessee farm outs related to horizontal wells provide companies with various options to collaborate, share risks, and optimize resource extraction in the state.
Tennessee Farmout - Horizontal Wells
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Advantages And Disadvantages AdvantagesDisadvantagesThese wells increase oil and gas production.These wells are highly expensive to build and maintain.It prevents seepage of water and gas into the well.The digging and finishing of the well is a complicated process needing skilled and special machinery.3 more rows
The length of the horizontal section, or lateral, can range from a few hundred feet to several miles. Hydraulically fractured horizontal wells have accounted for most of all new wells drilled and completed since late 2014.
Cost depend on the depth and complexity of the well. Modern horizontal well drilling costs can easily exceed $4,000,000 just in the drilling phase. Without drilling complications these wells generally take about 3 weeks for the drilling phase.
It takes an average of 50 to 60 days to drill the well to its target depth, which, with modern technology like horizontal drilling, could be up to two miles underground and up to two miles horizontally.
A horizontal well is a type of directional drilling technique where an oil or gas well is dug at an angle of at least eighty degrees to a vertical wellbore.
Horizontal directional drilling costs $10 to $30 per linear foot on average, depending on the location and project type.
Horizontal wells are used in situations where the reservoir is abnormally shaped, or excavation is impossible. Horizontal drilling is preferred over vertical drilling due to its ability to access subsurface reservoirs that are not accessible from directly above.
