Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on April 28, 2018 at 9:55

You guys are getting me confused.  ddozier, which company offered you the top lease?  Since you were under lease to SWN, I took it you were referring to Ankor.  bpm obviously thinks you are referring to SWN.  SWN is in a tight spot with recent projections that their stock is head to $2/share.  I doubt they have any interest in investing in the Brown Dense.  At the same time, they are sitting on a good size leasehold.  Remember those large units that they formed with the language used for horizontal drilling and then HBP'ed with vertical wells.  They can sit on those for a few more years at least.

Permalink Reply by Bradley McWilliams on April 28, 2018 at 11:48

Sorry to cause confusion! (Although that is one of my more advanced skills...)

I completely missed the "top" portion of the comment, and assumed Mr. Dozier was talking about SWN.

I do think that any company leasing the LSBD would have a bargain basement frame of mind.  Simply too much gamble involved to pay top money.  SWN's press releases from 5 years ago sure made it sound as though acres there are worth thousands, but experience has lowered that range substantially.  Personally I think there are plays elsewhere that are somewhat proven, but not in the limelight that would be better investments; southeast OK, the Eaglebine, parts of the Eagleford, maybe even the Haynesville.  

Permalink Reply by Rock Man on April 28, 2018 at 3:36

Agree that SWN may be radio silent but buyer will be the one talking. Hope a group can crack the code in this play. Increasing oil prices may help

Permalink Reply by Skip Peel - Mineral Consultant on April 28, 2018 at 3:49

RM, any idea why vertical completions have been more productive than the horizontal completions.  The vertical, open hole discovery well was said to have had a heck of a kick during drilling.  Then it sat uncompleted for a good while. 

The question that I do not recall any of the operators of LSBD exploration wells answering is whether they considered the formation and convention or an unconventional reservoir. 

Link to discovery well.  http://sonlite.dnr.state.la.us/sundown/cart_prod/cart_con_wellinfo2...

Permalink Reply by Rock Man on April 28, 2018 at 16:15

Skip, IMO the Lower Smk Brown Dense is an unconventional reservoir. This section is the regional source rock for the Upper Smackover and other conventional formations that "obtain" their O&G charge via migration from the world class source rock that is the Lower Smk Brown Dense.

Unlike other source rocks, the Lower Smk is a high carbonate content interval. As I understand it, clays are not an issue. But also as I understand it (and I have not done a deep dive into the intricacies of this formation), there is a lot of variability in organic content throughout the section. As well as internal porosity and permeability on the nano scale (that is common in unconventional reservoirs).

Vertical wells drilled into the Lower Smk Brown Dense have often encountered good kicks while drilling - this has been the case over time from S Tx / Mexico through E Tx and into La / S Arkansas. These kicks are almost definitely tied to natural fractures and not matrix reservoir.

I would figure that the discovery well was a naturally fractured zone - and the fracture zone was extensive enough to give the wells sufficient "fractured reservoir volume" to produce some decent O&G volumes.

In a well like the discovery well, the fracture system itself is the reservoir (void space) - O&G has migrated over time into the fracture network (imagine this being like a spider web of fractures / void space). And once these natural fractures are depleted, the wells is plugged.

You see this (i.e. a naturally fractured sweet spot) in other unconventional formations, Eagle Ford, Marcellus, Utica, etc. These usually single well producers don't require a frac job but the natural fractures are limited in areal extent.

Why haven't horizontal Lower Smk Brown Dense wells worked that well?

The key to horizontal drilling in unconventional plays is to use fracture stimulation technology to break up the reservoir along the lateral and then allow the O&G that is trapped in the nano pore system in the reservoir to migrate from the pores into the fracture network. The key to this migration is to have sufficient permeability in the reservoir to allow the O&G to move from pores into fractures.

The perm in these systems is in the nano range - and if the perm is very low, O&G migration will be limited. This inability to re-charge the fracture systems with reservoir derived O&G may be the key to why the horizontal wells don't work out that well - the rock is just too "tite" as to permeability and cannot transfer the O&G from reservoir to fracture systems.

The naturally fractured reservoirs are an example of this phenomena - mother nature fractures the reservoir but once the fractures are depleted, the reservoir does not have to ability to migrate the O&G into the open void (fracture) system.   

I would figure that the core work done by the players (e.g. SWN) would have ID'd negative perm issues if that is truly the case in this formation. And this is something that SWN or others would not be advertising the results of.

And you cannot change permeability - it is what it is.

Long winded explanation but wanted to try to explain what may be the case here. There are other recent plays (e.g. Goodland Lime / E Tx and Pearsall Shale / S Tx) that have "failed" due to similar reservoir issues.

Hopefully the Lower Smk Brown Dense does not end up in the same cemetery with these two formations!

Permalink Reply by Bradley McWilliams on April 29, 2018 at 1:07

I'm in no way a geologist, but you've explained this in a way I understood. I remember C'peake worked a formation in Alabama before the Haynesville came along.  Black Warrior Basin I believe.  It was a flash in the pan at best, so probably another to be added to that list. 

Thanks.

Permalink Reply by Skip Peel - Mineral Consultant on April 29, 2018 at 1:16

Good explanation, RM  Thanks for taking the time to do it.  Over the course of the latest Brown Dense exploration period, there have been wells drilled in about 15 different fields starting in AR and moving into LA.  Ankor is now focused on the Ora Field area.  Hopefully Ora will have the proper reservoir qualities.

Permalink Reply by Bradley McWilliams on April 29, 2018 at 1:33

Mr. Peel, not being from the area, is the Ora Field close to the area that SWN had moderate success?

Permalink Reply by Skip Peel - Mineral Consultant on April 29, 2018 at 1:41

SWN drilled a number of areas with varying degrees of success, none great.  The Ankor wells and the last three SWN wells are all located in a general area of Union Parish, LA.  Considering the highly variable nature of the reservoir, I'm unsure what distance qualifies as "close".

Permalink Reply by Bradley McWilliams on April 29, 2018 at 2:04

It certainly does sound as though this is an area where the neighbors well across the fence may do good, yet on this side of the fence it's a duster...

I actually found the "Ora Field" on Google. Entered Ora and it popped up.  I'd say the locations are close enough to at least get someone's hopes up.

Permalink Reply by Skip Peel - Mineral Consultant on April 29, 2018 at 2:10

Hope dependent on nano scale perm is an iffy proposition.

Permalink Reply by Bradley McWilliams on April 29, 2018 at 2:30

Absolutely it is.  Explains the low ball offers folks have gotten...

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