SWN Shopping Lower Smackover Brown Dense Position at Winter NAPE

See attached - despite some decent EUR projections, SWN has decided that this is not the play for them to be making right now.

Also marketing positions in Colorado Sand Wash basin, Utah Paradox Basin and DJ Basin

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RM, care to provide an opinion on the Upper Smackover and Lower Smackover vuggy matrix potential?  This is the first I recall of SWN mentioning these targets.

SWN including mention of the "vuggy matrix potential" is most probably teaser gravy to attract more attention and tout prospectivity.

The term vuggy is usually used to describe the presence of large, non connected void spaces in carbonate intervals - these tend to be formed by various localized diagenetic processes (including surface exposure). When present, vugs can give you some very good storage capacity (sometimes you can put your finger tip into the holes), but the connectivity (permeability) of this sort of system tends to be very low.

So the big question is - "How do you connect up these vugs and get the O&G (and associated water) out of the reservoir?"

The Upper Smackover will tend to have more matrix related P&P - and the presence of a vuggy porosity component. The Upper Smackover section has been chased for O&G in this part of the world for decades with some excellent historical results. The production from this package is very localized and dependent on unique reservoir properties. It is a legitimate secondary target in the SWN area (not just from vugs but from more conventional P&P).

I don't put much credence in having vuggy porosity being a component of prospectivity in the Lower Smackover. The keys to this play is the inherent nano P&P in this organic rich section - and how to drill, complete and produce this economically.

A similar play that has had a similar track record is the Goodland Lime in East Texas - organic rich carbonate that has had some success but which is looking to be uneconomic. Companies like Chesapeake, EOG and SWN have been in that play are either have gotten out or are looking to divest.

Another organic rich carbonate play (which was gas prone) is the Pearsall Shale in S Tx - lots of drilling by EOG and others. But play proved to be uneconomic.

The sad but real story here is that not all "unconventional shale" plays work economically - especially in today's lower price environment.

Thanks for the explanation.  It may take a meaningful improvement in well results from Ankor to breathe new life into the Brown Dense.  It's good to hear your opinion that they have some capable and experienced management.

Just deleted my comment as to Ankor having Penn Virginia management background  - I got them mixed up with another company.

Majority of Ankor experience is tied to offshore Gulf of Mexico - but I am sure that they have expertise in hard rock on shore

Thanks for the correction.


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