When an operator hedged an acquired package with uneven well performance, AlphaX Sky's pre-trained basin-scale AI models exposed and corrected inflated forecasts so hedges matched repeatable production.
Situation
- An operator wanted to hedge for acquired assets adjacent to its existing operations.
- The package included oil and gas weighted wells with heterogeneous performance histories.
- Seller-provided economics assigned outsized value to a small subset of wells.
Challenges
- Engineering summaries obscured well-level variance through averaging.
- Some forecasts replaced actual history with synthetic hyperbolic reconstructions.
- High-value wells disproportionately influenced type wells and aggregate EURs.
How AlphaX Sky Helped
- Isolated the assets by basin to remove geographic noise and compared wells against local competitors.
- Identified wells driving type curve inflation through percentile analysis.
- Conducted spot checks comparing Sky EURs to third party engineering calls.
- Applied group level conservative overrides to test downside exposure.
- Preserved multiple scenarios without altering the base dataset.
Quantitative Outcomes
- Top-decile wells shown to skew aggregate EURs materially.
- Individual wells valued over $1.5MM shown to rely on unrealistic late-life rates.
- Automatic conservative projections reduced select well EURs by 40%+.
- Oil and gas performance diverged materially, requiring stream-specific interpretation.
Impact
- The hedge provider gained confidence in the Sky forecasts which were reliable and driven by similar well profiles versus the broader approach of the Arps engineering.
- Hedging volumes were sized to repeatable production, not best-case assumptions.
- Risk was contained without rejecting the transaction outright.
Call to Action
When a handful of wells and their performance underpin risks that exceed $25MM, AlphaX Sky gives you the tools to see, and control, the risk.