Replies to This Discussion

Permalink Reply by Larry T on February 17, 2011 at 7:36

Skip and Robert, we are in sec 28 16N 10W, Bisitineau Field, most sections around us have been drilled. We were unitized by HK last year and cant figure why a permit for sec 28 has not been applied for. Several of the leases expire this year. HK paid preimium for the lease bonus in 08. What is your best guess if they would let this lease expire and once they apply for a unit, do they ever let the leases expire once the unit has been aprroved. One guess is at most of the section is under Lake Bistineau and could that have anything to do with well spacing or trying to change unit size.

Thanks for your opinion

Larry

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Permalink Reply by Skip Peel - Mineral Consultant on February 17, 2011 at 7:42

Larry, unless I'm missing something all of the shale in 16N - 10W is better than average rock.  Petrohawk, although one of the best operators by HA well results, has been ham strung by financial difficulties from early in the Play.  They have had to make tough decisions regarding where to spend their limited development dollars.  If Petrohawk took leases covering a good bit of acreage in this area with high dollar extension options, they may be hoping to come back and lease in the near future at a lesser amount.  I can't imagine them not doing everything within reason to keep the drilling rights in your area.

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Permalink Reply by David on February 17, 2011 at 7:52

Skip, section 35 of T18n r15w is under lease but expires in July. Most of the section is under cross lake but our neighborhood leased at $15k/acre.  Sections to our south are in a unit. Do you have any knowledge that Chesapeake would let these leases expire.

Thanks.

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Permalink Reply by Skip Peel - Mineral Consultant on February 17, 2011 at 8:03

Chesapeake never formed a unit for Section 35.  In spring '09, CHK allowed several state leases covering the lake bed to lapse (~$20M).  They also put up for sale 100,000 acres of leasehold in Harrison and Panola counties and northern Caddo and Bossier parishes.  There was no buyer interest and the leasehold has been allowed to expire.  That and the fact they stopped recording leases for that area around that time caused me to do a little analysis.  Turns out CHK was shifting their development focus south to far south DeSoto and moving even further soth into Sabine Parish.  They are the only major operator still recording significant numbers of leases and that is in the far SW corner of the LA. Play along Toledo Bend.

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Permalink Reply by The_Baron on February 17, 2011 at 8:04

I would bet that CHK lets this area go.

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Permalink Reply by Larry T on February 17, 2011 at 8:12

Skip, many thanks, we are hoping for the lease to expire and do it again.
I know you have been told many times, but we are truly thankful for all of your knowledge and input to these discussions. Thanks again.

LT

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Permalink Reply by Robert Duke on February 18, 2011 at 7:05

This is a question about "challenges" in the SE corner of Red River Parish.  According to the VP statement above (and I listened to the entire transcript too, but Skip really captured most of the info here), "as you move east and deeper into the basin (south) they tend to be challenged by high pressures and high temperatures which the industry is working on from a technological standpoint as well as faulting ans structural issues. ".  In the specific areas of 12N-9W and 12N-8W, I don't think there are any faults on the maps I have seen.  However, I do remember a discussion about some rapid changes in depth, or some such, up in 13N-8W (Martin Field mostly, I think).  Does anyone have any knowledge of the nature of the problems and the nature of the solutions?  Will better seismic help find the shale a bit better?  I was encouraged to hear that Encana is working on the temp and pressure issues from a "tech standpoint" - I presume it means they are evolving their frac techniques?  I am also encouraged that it is apparently not a rock clay content problem down there.  I would guess that whatever they have to do, it will cost a bit more.  Don't the wells get even deeper as you go further south, say in Sabine or Natchitoches Parishes?

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Permalink Reply by Spring Branch,mineral owner on February 18, 2011 at 14:05

Robert, I hope you are right about faults in the SE corner of Red River, but I'm not sure that you are.  I do know that Encana drilled a vertical well in 13/9, Section 5 very late in the game for some reason (I have an interest there and I cant seem to be able to find out for sure why they drilled the vertical).  The IP's in 12/9, Sections 13, 14, and 24 are awful for some reason!  I assume it has to do with porosity, perm, or both.  One thing for sure.  If they do let the leases expire in that area , we will know something pretty negative is going on there.  Again, I hope it is not the case, but I'm afraid it might be. The Operators are drilling some pretty deep wells in San Augustine and Nacogdoches counties, learning how to deal with the heat and pressures and making some pretty outstanding wells, so I don't think it is merely a depth issue.

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Permalink Reply by Robert Duke on February 18, 2011 at 14:47

Could be that up in 13-9 there is some faulting, but looking at the PHK map, it looks to me like the monster fault over on the east side is up in 14-9, running from SSW to NNE; just eyeballing it as best as I can, and I can't discern any other faults to the SE of there.  I remember that when the wells in  13-8 started coming in variable, there was talk about the shale dipping, or some such - I gathered it was changing depth rapidly but not actually faulted.  So I am left wondering how much it is a matter of depth, temp, rock quality, water from somewhere (I seem to recollect that a lot of water in the IP test can be due to poor fracture throwing the water back at you). I agree the wells have not been spectacular; I have an interest in the 2nd biggest producer in Liberty Field, and it only came in at 8.4 mmcf/d, but on a smallish (for then) choke.  Since then, the chokes have been going down even further, which makes it harder to compare things.  My personal best guess is that as you decrease the choke, IP should drop as the square of the ratio of the chokes, but that is making a few assumptions.  Anyway, both 12-9, 13-9 and 13-8 all DO have some pretty reasonable wells, but mixed in with some not-so-great ones for sure too.  I am just encouraged that they are "working on it";  it seems to me like the area would have to have Bossier Shale potential, given that the latest PHK maps place us pretty much in core for that, and it is shallower.  I too am concerned about what it would mean for the operators to dump a lot of leasehold in this area; there are a bunch of units without a well yet!  In commenting, I have just been hoping someone might know more about the technical challenges actually being faced and the potential solutions.  I don't know if they would have drilled a vertical to quickly get HBP without a fault problem; after all Encana / Shell IS going berserk with gas platforms up in 13-9,  sections 10 and 15, which would be ESE roughly of your vertical I think, but not by much.

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Permalink Reply by Skip Peel - Mineral Consultant on February 19, 2011 at 9:31

A review of data for wells in lower 11N - 9W and upper 10N -9W will reveal Bottom Hole Temps approaching 400 degree F.  Everything electronic from MWD to logging tools is negatively impacted at these temps.  Temps much greater than 400 degrees tend to significantly degrade hydrocarbons.

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Permalink Reply by Robert Duke on February 19, 2011 at 11:22

Hi Skip,

I presume these temps are picked up on "classic" SONRIS, not SONRIS "lite"?  I am still dinking around with the simpler tools.  I also presume, though, that if we are talking townships in the range of 13 to 12N and 8-9W, there are not these temperature problems there?  I found it interesting that Gosh Darn is pointing to possible good wells over in 13N-7W I believe, around Ashland.  I am presuming the shale is descending into the abyss on a general SE heading, so I don't know that Ashland gives much hope for significantly further South.  It's just my opinion too, but given the Bossier potential in this area, combined with relatively cheap lease extensions still likely for at least another year (rough estimate, based on how my lease went), if I were an operator I would try to get something drilled into the Bossier at least to hold (I also presume, though, that they try to hold into the Haynesville due to Pugh Clause stuff).  I am personally already HBP, and just hoping, somewhat subjectively, that there is still some potential for more drilling in this area, as gas prices improve.

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Permalink Reply by Skip Peel - Mineral Consultant on February 19, 2011 at 13:40

You presume correctly. The SE corner of the Play is more prospective for Bossier, less so for Haynesville.  That being said it is worth keeping in mine that both are dry gas.  And all the operators seem to have plenty.

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