What is the allocation process for production reported annually or quarterly?

When production is reported quarterly or annually instead of monthly, WellDatabase applies a distribution methodology to create monthly production values while preserving the reported production totals. The process below outlines how those monthly values are calculated.

Step 1: Determine the Reporting Period

To begin, we need to determine the duration of the production period. This can vary depending on how the states report the data. Sometimes they provide a start and end date, other times they specify the number of days the well was producing, and in some cases, they simply indicate whether it is for a quarter or annual period.

Step 2: Adjust the Days Producing

If the number of days the well produced is less than the number of days in the reported production period, we evenly distribute the reduction across each month. For example, if a quarter consists of 92 days and the report indicates that the well produced for 83 days, we will subtract the difference (9 days) evenly from each month. In this case, it would mean subtracting 3 days from each month.

Step 3: Create a Monthly Production Distribution

We then evenly divide the production over the monthly periods and create a stair-stepped production view.

Step 4: Create a Best Fit Decline Curve

Then we create a best-fit decline over that stair-stepped production view to get an overall decline view of the well.

Step 5: Calculate Monthly Decline Percentages

After that, we calculate the decline percent for each monthly period based on the best fit we created.

Step 6: Apply the Decline Percentages

We then apply those percentages to the stair-stepped view to give each month a more “declined” view of production.

Step 7: Convert Production to Daily Values

Then we have to break it out to daily numbers so that we can ensure the days producing are respected.

Step 8: Reconcile to the Reported Production Volume

The final step is to reconcile the sum of the production to ensure the total production for the reported period matches the reported volume. This is necessary because the decline model we used here fits to the stair stepped volumes, but it’s only a fit. In order to ensure the data matches up, we compare the values and evenly adjust the monthly periods until they match. For example, we might find that the total is 10 bbls over what was reported. We loop over the months we distributed the production to and remove a single bbl from each until we get a match.

Frequently Asked Questions

Q: Why does WellDatabase distribute quarterly or annual production into monthly values?
A: Some regulatory agencies report production quarterly or annually instead of monthly. WellDatabase distributes the reported production across the applicable months so production can be analyzed consistently alongside monthly production data.

Q: Does WellDatabase simply divide annual production by 12 or quarterly production by 3?
A: No. While production is initially distributed across the reporting period as part of the process, WellDatabase then applies additional methodology, including decline analysis and reconciliation steps, to create the final monthly production values. The result is not simply an equal division across all months.

Q: Does this process change the total reported production volume?
A: No. The final step of the process reconciles the distributed production back to the reported volume to ensure the total production remains consistent with the source data.

Q: Why do I see monthly production values when the state reports production quarterly or annually?
A: WellDatabase distributes the reported production across the applicable months using the methodology described above, allowing production to be viewed and analyzed on a monthly basis.

Q: How are days producing handled during the allocation process?
A: Days producing are incorporated into the methodology to help ensure production is distributed appropriately across the reporting period.

Q: Is this methodology applied to all production records?
A: No. This methodology is used when production is reported at a frequency other than monthly, such as quarterly or annual reporting periods.

Q: Does WellDatabase preserve the reported production totals?
A: Yes. The methodology is designed to preserve the reported production volume while distributing production across the applicable monthly periods.

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