Multiple well lease decomposition and forecasting strategies

• Production estimates from individual wells are required in severance tax estimation.
• Methods to decompose multiple-well leases into individual profiles are described.
• Techniques yield broadly similar results in severance tax exemption calculations.
• Decline curves are superior for understanding individual well behavior.

Oil and gas production in the United States is frequently reported on a lease or unit basis. Leases and units with more than one well pose special problems in forecasting because individual well profiles must be inferred based on well tests and the aggregate production of the lease or unit. The purpose of this paper is to develop and compare decomposition procedures for multi-well leases based on decline curve and fixed allocation techniques. Decline curve techniques use the production profile of the multi-well lease to decompose and separate the individual well profiles, while a fixed allocation method samples the lease production profile at specific points in time to allocate production between wells. Using three multi-well lease examples from Louisiana׳s Haynesville shale, we compare the decline curve and fixed allocation methods and demonstrate that the techniques yield broadly similar results in severance tax exemption computations and estimates of expected recovery volumes. Leases that require alternative decomposition techniques are depicted.