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Permalink Reply by Dion Warr, CPL on September 24, 2009 at 2:03

Skip:

It's so funny what time and relativism will do to O&G's sense of high and low prices. Just a few short years ago, O&G's were just hoping for long-term oil and ng prices above $50 and $2.50 - $3.00 respectively. Now those prices are uneconomic disappointments. There used to be plenty of conventional prospects developed at those levels; now, although it is justifiable that the ROI's and metrics on shale plays have redefined the models with natural gas, there are still good oil prospects collecting dust on shelves at this time. The only explanation that I can offer is that many of the smaller and midsize independents are still struggling to reassemble prospects and reload on E&P dollars.

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Permalink Reply by Skip Peel - Mineral Consultant on September 24, 2009 at 3:38

Dion:

The days of the prolific shallow oil prospects in the Shreveport District seem to be drawing to a close. A quick scroll through the Well Scout pdf reveals few of these wells with the exception of DGH in the Bellevue Field, numerous operators in the Caddo Pine Island Field and James Drilling in the Joyce and Salt Fields. The preponderance of current development activity is deep gas with the attendant infrastructure cost and ,with the exception of the shale, the consequences of drilling the periodic dry hole. As the cost of E&P continues to increase and the ability to be competitive depends on acquiring the latest technology, the days of the small, local oil & gas company appear numbered.

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Permalink Reply by The_Baron on September 24, 2009 at 5:28

not to mention is getting hard to buy leases for a shallow play in NW LA.

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Permalink Reply by wlt on October 5, 2009 at 2:07

I have 200 acres in the heart of Bellevue field. Five million bbls still in place. All unleased. 100% ownership

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Permalink Reply by Dion Warr, CPL on October 19, 2009 at 3:11

Skip:

While I am inclined to agree with you as to shallow oil prospects (as to virtually all of the low- and much of the upper-hanging fruit already being plucked), I would anticipate that there's still some life left in the Shreveport district not directly tied to the Haynesville, and there will be a place for some of the better placed 'Mom and Pops' during this action. NW LA has been written off more than a few times (most recently within the last 5 - 10 years).

IMO (deferring to you, as you have lived with the realities of O&G life in the Arklatex a lot longer than I have ever been exposed to it), the larger independents that have taken over this unconventional resource play have to function at a certain economic scale (as the terms of the play, and their cash streams and debt and credit revolvers dictate), which means that certain zones and completions are going to be electively bypassed because of ROIs deemed to be sub-optimal. The 3-D data being generated by this play should generate smaller areas of interest that will translate into prospects for smaller independents. It may require some dealmaking, but it should work to all parties' advantages, and it will still be worth it to the independent generating between 4-6 and 6-12 prospects a year.

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Permalink Reply by Skip Peel - Mineral Consultant on October 19, 2009 at 3:20

I hope you're correct in your analysis, Dion. I just see the majority of future E&P in NW. LA. being gas, not oil.

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Permalink Reply by Dion Warr, CPL on October 19, 2009 at 5:47

Skip:

I'm sorry if I did not adequately express my assent with your thought; I am definitely onboard with you in your opinion on the primary focus being on gas vs. oil insofar as future (or remaining) O&G prospecting and development to be done in NW LA.

I was mainly commenting on the fact that the HS play and its economics and realities have in essence "sucked all the oxygen out of the room" as far as other E&P plays and access to E&P dollars in NW LA (one could even go far as to say the entire state), as well as almost irretrievably changed the playing field as far as leasing for prospects in other zones. The regional perception has seemed to become that if it is not economic for the HS, it's just going to get drilled anytime soon, when there are still viable prospects out there at other zones at current economics in the HS fairway, whether it be attic plays or tight gas zones still available here and there. For those entities and groups that survive (and thrive) by putting together several prospects per year, that has been their 'bread and butter' for decades.

I'd like to think that some of the non-HS activity (or lack thereof) will begin to break out in 2011 after some of the non-developed and outlying leases begin to come due or expire, again just my opinion.

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Permalink Reply by Skip Peel - Mineral Consultant on October 19, 2009 at 6:28

Good points, Dion. One of my all time favorite comments on the site was Les B.'s observation that the development of the HS will reveal much in the way of prospective formations/zones at shallower depths. In areas where there have been few deep wells logged with current technology, new information will reveal additional opportunities. What's "behind the pipe" may not be shale (excepting the Bossier of course) but it could be quite valuable to operators and mineral owners. I hope you are correct that E&P activity will broaden in 2011.

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Permalink Reply by alleyboy on September 29, 2009 at 3:17

any word on the well on cross lakes north shore? Sonris says waiting on completion since early sept. the ninth , I believe.

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Permalink Reply by The_Baron on September 29, 2009 at 8:29

Saw some flaring from the Tellus well last week.

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Permalink Reply by The_Baron on September 30, 2009 at 3:23

It will be interesting to see if they have the problems with condensate other wells in this area have had.

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Permalink Reply by Andy Smith on September 30, 2009 at 7:59

what kind of problems w/ condensate?

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