Exco - well spacing from 8 to 6 per section

Exco posted earnings and one item is that they are decreasing the number of wells per section from 8 to six. 

From earning report:

The upward revisions due to changes in price were partially offset by downward revisions of 127 Bcfe in proved reserves due to other factors. These downward revisions were primarily related to operational matters for our Haynesville shale properties such as scaling, liquid loading due to high-line pressure and the impact of drainage on new wells drilled directly offset to the unit wells. We have modified our spacing program from eight wells per section to six wells per section in order to maximize our rate of return for each section. We also have plans to reduce line pressure in the field, alleviate loading and implement an artificial lift program.

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Permalink Reply by adubu on February 27, 2014 at 6:55

jay-- is that based on 640 a unit?so spacing about 100-110 a per well?

Permalink Reply by adubu on February 27, 2014 at 9:27

Jay--- does La have 10% +/- like Texas in standard gas unit so spacing maybe more like 120 acres per well 

Permalink Reply by Dion Warr, CPL on February 28, 2014 at 3:38
Adubu:

+/- 10% is a standard tolerance incorporated in the LA field orders; however, the units are more or less based on full sections or aliquots of partial adjacent sections to make up approximate 640 acre units. Large sections and small sections usually fit within the 10% tolerance; wherever land grants or other concessions do not fit a Jeffersonian township system, units are usually superimposed onto the existing land-based system which match a 1 sq. mi grid. Infill units and physical features which would impede development (e.g., Toledo Bend) require atypical spacing which is usually reasonably accommodated by field orders.
Permalink Reply by adubu on February 28, 2014 at 4:01

Dion-- Got you thanks-- some what similar to Texas +/- 10% tolerance 

Permalink Reply by dominator on February 28, 2014 at 10:53

will they still be able to get 80B's per section?

Permalink Reply by adubu on February 28, 2014 at 11:10

Will--- if they say in their opinion they can drain the unit with 6 wells as complete as 8 then they will get the % from rock based on what there--- if sweet spot then More if bad rock then less-- nothing magic about 80B  

Permalink Reply by tc on February 28, 2014 at 11:49

They didn't say they could drain the section as well with 6 as 8 wells, but that the cost of those 2 extra wells, which were lowering production & EURs on the other wells, didn't make economic sense.  They took a $97 million impairment charge due to lost NG reserves as each section will now only have 60 bcf of reserves.  These are general numbers as different sections will have different reserve amounts.  Also if NG went back up to $8-10 the math would change.

Permalink Reply by Frank on February 28, 2014 at 17:58

tc, if NG went back up to $8-$10 my math would change.

Permalink Reply by adubu on March 1, 2014 at 2:42

tc--- as bullish as I am on Nat Gas doubt Nat Gas will go to 8-10 range in next 20+ years -- with 100 years reserves in the 3,000 Tcf range operators will drill to produce to cover demand so IMO you see Nat Gas stay in the $4-$5 range next two decades with occasional spike like we saw last couple week to the $6.50 range then settle back to $4.50. Good money can still be made with $4.5 gas prices. Demand around 73 Bcfd today and with Exports of LNG 10-15 Bcf by 2020 drilling can easy increase to cover 85 Bcfd. Which will help jobs and mineral owners.But prices will say in range and may increase with normal inflation about 2+% each year. I HOPE I AM WRONG AND PRICES SLOW INCREASE TO $6 RANGE 

Permalink Reply by tc on March 1, 2014 at 7:37

I and Exco also doubt NG will go to $8-10 or even much above $6 for an extended time and that is why they are moving to 6 wells per section.  However if NG does go much higher, they could drill more than 6 wells per section as the economics change.  The above change is for economic reasons and not geology restraints.

Permalink Reply by adubu on March 1, 2014 at 15:56

tc--Then Why drill even six wells then since unit HBP with just one well-- I think they are saying six wells will drain the unit so even if gas $10 no reason to drill 8 if 6 drains reservoir of unit in that formation 

Permalink Reply by kittycatmama on March 3, 2014 at 17:52

Noticed on DNR today that Exco is applying for CROSS laterals in the Holly Field. I think EnCana got ok to do those in south Bossier but nothing we have seen in Desoto Parish

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