Replies to This Discussion

Permalink Reply by JHH on January 29, 2011 at 9:11

So if your deepest well is 12,000 feet and the smackover is down at say... 13,000 feet... you can get a new lease below 12,000?  deep-deep rights?

 

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Permalink Reply by Parkdota on January 29, 2011 at 9:28

JHH, from what I understand if you have a depth and, or Pugh clause then the answer is yes. 

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Permalink Reply by JHH on January 29, 2011 at 9:35

Sham-WOW!  Hopefully

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Permalink Reply by JHH on January 29, 2011 at 9:49

This was in the Fort Worth Star Telegram yesterday.  

JANUARY 28, 2011

Smackover smacking of new oil play?

The Lower Smackover formation in southern Arkansas and northern Louisiana "could emerge as the next new oil play," energy analysts with the Jefferies & Co. firm say in a note to investors.

The Lower Smackover is just below the natural gas-rich Haynesville Shale, which has prompted heavy drilling activity in recent years in northwest Louisana and part of East Texas. But Haynesville activity is being slowed by weak gas prices. The Jefferies analysts, including Subash Chandra, noted that the Lower Smackover is a "liquids-rich" formation that would offer the opportunity to produce oil and natural gas liquids (such as propane and butane) that are commanding more-attractive prices than dry gas.

Horizontal drilling technology "could ignite the Lower Smackover play," the analysts wrote, while adding,  "Success is far from certain. We are not aware of any horizontal successes yet." But they conclude by saying, "We wouldn't be surprised if operators more aggressively switch their attention to the liquids-rich Smackover."

--Jack Z. Smith

Posted at 05:05 PM | Permalink

Read more: http://blogs.star-telegram.com/barnett_shale/2011/01/smackover-smac...

 

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Permalink Reply by Les Bamburg on January 29, 2011 at 10:04

Parkdota, the main difference is the Smackover play is more conventional than the Haynesville Shale and therefore is not hydrocarbon bearing over the entire region.  This is similar to the Cotton Valley play in that it is productive in certain areas that possess the right combination of factors.  The Smackover generally is not a source bed and hydrocarbons must migrate from other sources and be trapped within the formation.

 

Due to the Smackover's depth in the Haynesville Shale area it is as likely to contain dry gas as oil.  Many older leases may not contain a vertical pugh clause so shallower production could have retained the deeper Smackover mineral rights.       

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Permalink Reply by North LA on January 29, 2011 at 12:59

Les,

 

I think the lower SMK is considered a source rock.

 

"The Brown-Dense Member (Lower) of the Smackover Formation is well documented as a world-class source rock (Klemme and Ulmishek, 1991). Brown-Dense generated hydrocarbons migrate into sealed Smackover reservoirs as an immature crude and crack in place with burial."

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Permalink Reply by Les Bamburg on January 29, 2011 at 13:12

NLA, thanks for the information.  So the follow-up question might be - is the Brown-Dense Member found under the the entire Haynesville Play area or is it limited to the area along the Louisiana-Arkansas border?

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Permalink Reply by North LA on January 29, 2011 at 13:37

Good question.

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Permalink Reply by Bobi Carr ("parker") on January 29, 2011 at 16:42

Also, don't forget that even if a lease contains a pugh clause, that clause usually kicks in AFTER a well has been drilled to a particular depth.

 

In other words, if you have a lease in effect and they haven't drilled yet, they could drill a Smackover well and hold everything ABOVE it.

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Permalink Reply by The_Baron on February 1, 2011 at 5:36

Parker,

 

The pugh clause takes into effect when a lease is HBP and past its primary term. Even if a shallow well has been drill, all depths originally covered will be covered until the primary term expires.

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Permalink Reply by Dion Warr, CPL on April 14, 2011 at 8:20

Parker:

 

Check to see how your stratigraphic Pugh reads.  If you have the possibility of maintaining the non-productive portion(s) of the lease by "Pugh Rentals" past the primary term, depending on how it is worded, the Pugh rental may maintain all non-productive acreage and strata during that time; then again it may not.  Also, if lessee exercises any option period past the original primary term (e.g., "3+2" or "3, 1, and 1" leases), those leases usually have the effect of creating a lease with an 'extended primary term' (ie. a lease with a three year PT becomes a four year lease PT or a five year lease PT).  The devil is in the details, here.

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Permalink Reply by North LA on January 30, 2011 at 16:25

What do you mean one JV to go?

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