From time to time, I reflect on the history of the Haynesville Shale Play.  From inception until now, it encompasses my entire mineral career.  I owe thanks to many who have helped me along the way especially my best friend, Randy Davidson, an outstanding O&G attorney and the finest man I've every called a friend.  His legacy lives on through the attorneys that he trained and that I work with to this day.  He is sorely missed by us all.

Recently I have mentioned the consolidation of proven HA/BO acreage into the hands of fewer and larger companies and what that means for the play's future.  Prior to the emergence of the Haynesville, the Cotton Valley was the major play that drove O&G activity in NW LA.  A number of companies were here chasing the Cotton Valley when the Haynesville land rush began.  Some companies were lucky to have existing operating areas that turned out to be prime Haynesville rock.  Chesapeake and Petrohawk come first to mind because of their aggressive push to lease up acreage especially that which was a "bolt on" to their existing areas.

Much of the crazy competition for leases can be attributed to two men, Aubrey McClendon at Chesapeake who announced the Haynesville Shale and other unconventional shale plays in April 2008 and Floyd Wilson at Petrohawk who competed with McClendon and helped to drive up lease costs for all the companies looking for a place in the play.  Aubrey started the public competition for leases by raising the stakes to a quarter royalty regardless of a tract’s acres and then quickly an escalating bonus competition that Floyd finally topped with a public bid for south Caddo Parish tracts of $30,313 per acre.  Astoundingly, his bid for those tracts included a 30% royalty.  That signaled the end of the period of outrageous lease offers as Petrohawk lost its primary lender, Lehman Brothers, in the financial market crash of 2008.

For those interested in what was going on prior to the public announcement of the Haynesville Shale, I recommend my blog post, Chronology of the Early Haynesville Shale Play in Northwest Louisiana.  Encana and Chesapeake were the early movers. For those who missed it or may care to read it again, here is a link:

 https://gohaynesvilleshale.com/profiles/blogs/chronology-of-the-early

With the exception of Encana's joint venture partner SWEPI (Shell Western Exploration and Production Inc.), all the early Haynesville focused companies were smaller independents or minor semi-majors.  Some were fortunate to have their operating areas in good Haynesville rock and some missed out completely.  For the unfortunate, Devon Energy comes to mind.  And for those with small operating areas who chose to sell out and seek other opportunities instead of spending like drunken roughnecks for additional leasehold, EOG Resources comes to mind.  Enron Oil & Gas went on to pioneer horizontal drilling and hydraulic fracture stimulation for oil in other basins when that was thought to be a risky move.  EOG turned out to be the most successful smaller independent unconventional focused operator and grew into a much larger company that continues to be a leader today.

The oil and gas industry has a long history of Mergers and Acquisitions (M&A).  The larger companies acquire the assets of smaller companies and smaller companies are often those that explore more risky or unproven formations hoping to make a discovery that vaults them higher up in the O&G world or makes them wealthy when they sell.  Those larger publicly traded O&G companies more often than not are cash rich and have lower levels of debt to value than the smaller companies.  They are fine with letting the independents take the risks and reap the rewards when they swoop in to acquire a proven or prospective asset.

The Haynesville/Bossier Shale has matured and has gone through a lot of M&A cycles over its life.  Many companies have come and gone.  The proven fairway now is operated by only a few significant operators.  The advantages of scale bring business advantages that are important in a future that likely includes fewer natural gas price spikes and a lower average price per mcf over time.  Those advantages include consolidated acreage that facilitates longer lateral wells, the ability to lower costs for field operations and supplies and leaner corporate operations.  The result of these changes may mean the end of natural gas prices above $4/mcf long term but fewer periods below operators’ break-even costs per mcf.

To help jog our memories of where the play has come from to where it is today, I offer a flow chart of the Haynesville operating companies.  I know I have left some out so feel free to chime in with those companies that you remember.

Expand Energy                                             Aethon                              Comstock                    BPX               PALOMA

Chesapeake        Southwestern                    Tellurian                              Covey Park                   BHP Billiton   Goodrich

Goodrich*            GEP Haynesville                Samson Contour                BEUSA (Bridas)            Petrohawk

Matador*             Encana                                Anadarko                           EOG Operating

Vine/Brix                                                         J-W Operating                    Forest Oil

SWEPI                                                           Questar (QEP)                                                               

El Paso (EP Enrgy)

*Goodrich and Matador were existing CV operators that partnered with Chesapeake on their early wells.  Chesapeake provided the field management and drilling and completion experience for both companies.  Matador moved on to oil focused basins and Goodrich sold off their Haynesville assets piecemeal to a number of different smaller independents.