Crimson To Give Up Half Of East Texas Acreage
This looks like a money thing rather than a prospective thing.
Management Commentary
Allan D. Keel, President and Chief Executive Officer, commented, "During 2010 we continued to position Crimson for balanced growth from our current portfolio of unconventional and conventional opportunities. Strong execution on our 2010 drilling program led to a 71% increase in proved reserves, a reserve replacement rate of 634% and finding and development costs of $0.67 per Mcfe. Moreover, we refinanced our second lien term loan and successfully completed a private placement that positions us to pursue an active 2011 capital plan focused on drilling initial test wells in our liquids rich areas to improve our oil to gas ratio, and on preserving the highest quality and concentrated acreage positions in East Texas."
Asset impairment and abandonment charges were $21.1 million and $6.5 million in the fourth quarters of 2010 and 2009 respectively. In 2010, the non-cash impairment charges resulted primarily from the impairment of portions of our unproved East Texas acreage that will not likely be preserved prior to expiration through drilling, farm-out or extension. The low natural gas price and high service cost environment, and the increasing shift of available capital by most players in the East Texas gas resource plays to oil projects in recent months, including the Company, will most likely result in the Company preserving no more than half of its East Texas acreage. In 2009, we incurred $3.2 million in non-cash impairment expense on various properties in South Texas and Southwest Louisiana related to low commodity prices, and recorded a $3.3 million abandonment expense related to lease expirations in our Alwan Field in South Texas.
My comments-Most likely it will preserve its proved San Augustine acreage for the stacked Mid-Bossier potential and they will let some of the Sabine County unproved acreage expire. What is going to happen to Sabine County and its Mid-Bossier prospects? This looks like two of the major holders of acreage in that county, due to low gas prices and an inability to HBP are letting the acreage expire. Devon and Crimson.
Views: 49
Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on -
Considering that the HBP'ed reserves of dry gas, and the debt incurred to acquire them, are so large on the balance sheets of many energy companies, the majority that made a commitment to the Play in its early history, and some that declined to participate like Devon, do not see any compelling economic reason to continue major capital expenditures for additional reserves, neither for new leasehold acquisition nor for drilling programs to hold it. It is telling that there are no farm-out opportunities for what is reasonably prospective acreage. Dry gas is out and oil/liquids are in. There may be a significant amount of acreage that is reasonably prospective for shale gas that will not be viewed as sufficiently economic to produce for a protracted period of time lacking some unforeseeable change in current market dynamics.
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Permalink Reply by ALongview on
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The Haynesville/Bossier may in the end become a 5 or 6 player game. Exxon/XTO, Shell/Encana, Chesapeake, Petrohawk, EOG, and EXCO.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I think you are correct that there will be consolidation through acquisition and possibly some through merger. In the end I believe it highly likely that much of the shale gas reserves will end up in the inventory of the major oil companies. They have the cash to acquire the reserves and their long term corporate time horizon will span any period of depressed price environment. I think all the majors see natural gas as a significant and growing part of their future operations and profits.
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Permalink Reply by ken hatcher on
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Comstock has the assets to survive but it Is really rocky right now.
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Permalink Reply by ALongview on
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Cabot just did 3 JV's to try and hold their acreage and SM Energy had a carry and earning agreement with Encana to hold theirs. There is no doubt there are many that are doing whatever they can to get the acreage HBP. Some just can't get er done for one reason or another. Too bad though because there are really good areas that will get left behind until we see gas at $6+ for a long time.
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Permalink Reply by JHH on
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Help me out here. I've never heard of Crimson. Never seen a well in panola or harrison county with the name Crimson attached. What and where is Crimson giving up. How deep? thanks
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Permalink Reply by JHH on
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Sorry,
Just captured this on the Crimson web page.
East Texas
Proved Reserves @ 12/31/09 1.6 Bcfe% Natural Gas & NGL's 100%Average WI 38%Productive Wells (gross/net) 1.0 / 0.52Developed Acreage (gross/net) 512 / 362Undeveloped Acreage (gross/net) 16,739 / 11,5823P Drilling Locations 422
Q4 2009 Average Daily Production (Mcfe) 3,300Key Operated Field(s): San Augustine, Sabine Target Formation(s): Haynesville Shale, Mid-Bossier, James Lime
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