Grant Norwood warns oil and gas investors to avoid wells with hidden liabilities from previous owners. Check original engineering reports and well logs for "behind-pipe" potential: zones that were drilled through but never produced, especially in older wells where former operators lacked capital or expertise to develop them.
You don't want to buy somebody else's liability. That's, that's a huge risk. But, uh, generally those stick out like a sore thumb and the people that buy those just want to say they're in the business really, really bad. Um, but like I said, it comes down to a lot of what the cut is, uh, what the well is supposed to make. If you can get your hands on any original, uh, engineering reports, going through the logs, seeing if there's any behind pipe potential and behind pipe. So what does that mean? Let's say you drill a 10,000-foot well and complete it, uh, right at about 8,000 feet. Well, if you pass through any other productive pay zones and they haven't been, uh, extracted yet, uh, you want to evaluate what those paid-up zones' potential is. And just because you've played out one zone doesn't mean that that's all there is to look forward to in that well. And the guy before you didn't have the money or the expertise or the willingness to go get it. And you'd think, why would anybody do that? But it happens. And a lot of times, cuz you know, the well might be 30 or 40 years old and that guy's retiring or moving on, just whatever have you. It's still there. He didn't go get it.
