Replies to This Discussion

Permalink Reply by Les Bamburg on August 9, 2009 at 11:13

Scott, probably a toss-up between Exco & Petrohawk. If EOG ever ramps up in Louisiana they might be a good pick also.

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Permalink Reply by Scott on August 9, 2009 at 11:40

Not sure if Exco is around my area. Did they pick up some acreage in South Caddo Parish?

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Permalink Reply by w.r. frank on August 9, 2009 at 16:46

EOG reported five new wells in Desoto at 14.3, 14.4, 14.9, 15.7, and 14.6 mmcfd. In the con call, EOG said all were pipeline constrained and could have done better IPs. EOG can drill my property anytime! Particularly if it does so in early 2010.

Nobody mentions SWEPI, which is producing to sales only the shameful Messenger well. The sooner ECA takes over, the better the landowners will be!

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Permalink Reply by Henry on August 10, 2009 at 2:59

What IS the problem with SWEPI? Why aren't they producing? Does anyone know?

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Permalink Reply by Skip Peel - Mineral Consultant on August 10, 2009 at 3:26

Henry, I don't know the reason but I have a theory. The big players in the energy industry have historically been focused on oil, not natural gas, and have long been focused on overseas and off shore exploration and production. The natural gas niche in the industry has thus been filled by second tier smaller E&P's both public and privately held. The companies who have committed to natural gas as the focus of their business strategy have found themselves with a tremendous opportunity brought about by a government commitment to a reduction in green house gases and the discovery of huge reserves of shale gas. The general partner of SWEPI is Shell Energy Holding GP LLC and, IMO, Shell has not made a decision to jump on the shale gas bandwagon. Their joint venture partner in the HS on the other hand, Encana, appears to have "bought in" to the shale gas opportunity. We tend to look at what development activity is happening in our backyard. Or in SWEPI's case, not happening. It is becoming obvious that Encana is taking the leading operator's role in the development of their JV leasehold. And actions by both parent companies in other regions and plays tend to support the theory that Shell has decided not to play the shale game in the short term and that Encana is making a commitment to increase their investment not only in the HS but in other shale plays. Encana is a good company. Any they are committed to the HS. I think we will talking about them quite a bit in the future. And Shell (SWEPI) will become a silent partner or sell their HS stake.

Permalink Reply by Henry on August 10, 2009 at 7:14

Skip,
If this is the case, Encana better speed up its activities in Sabine, or a lot of leases will expire in those 100+ sections that SWEPI has unitized.

Permalink Reply by Les Bamburg on August 10, 2009 at 8:56

Skip, I would beg to differ about large companies not being focused on natural gas. Many of these companies have devoted significant parts of their budgets to natural gas including unconventional natural gas. In the past this meant primarily tight sandstones and coalbed methane. They did miss out on the learning laboratory of Johnson County for the Barnett Shale which is where Devon, EnCana, Chesapeake, XTO & EOG developed their shale gas techniques so consequently are playing catch-up with the other players.

Recognize too that Shell has committed billions of $$$ and manpower resources to some currently ongoing international natural gas projects so may be effecting their resource commitment. Just because they relinquish operating control to EnCana does not mean they are not continuing to fund their 50% of the JV capital.

Permalink Reply by L. Brent Moseley on August 11, 2009 at 15:38

Les, there has been an update to the well information on SONRIS that indicates Fracing and "Flowback". What does this last term mean?

Also, a friend of mine in the oil business in Shreveport said that production rates on the existing shale wells in the area slow about 80% in the first year and then tend to level out for some as yet undetemined period of time after that. Do you agree with his analysis?

Thanks for your expertise.

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Permalink Reply by Les Bamburg on August 11, 2009 at 17:50

LBM, the "Flowback" just means the well is producing - probably into the gas sales pipeline but possibly to flare for a brief time.

All shale gas wells have a step initial decline rate that gradually flattens to the terminal decline rate that will apply for the remaining production years. I currently model at 80% - year 1, 35% - year 2, 23% - year 3, 17% - year 4, etc before reaching a terminal decline rate of 7%. More production history information is required to better understand the Haynesville Shale decline curve (type curve).

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Permalink Reply by L. Brent Moseley on August 15, 2009 at 11:26

Les, what are the determinants of a company's decision to shut in production on a new well awaiting higher gas prices? Is it directly related to the size of the well?

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Permalink Reply by Les Bamburg on August 15, 2009 at 12:54

LBM, I am not aware of any Haynesville Shale wells being shut in. There have been some wells that are being produced at lower rates on a smaller choke due to surface capacity restrictions or pricing.

In other plays such as the Barnett Shale & Woodford Shale, some operators are electing not to complete part of their drilled wells due to low gas prices.

Finally, in parts of the Rockies and Oklahoma producers have shut-in or curtailed production due to low gas prices. This typically only occurs when the variable operating cost exceeds the net gas price for the area. But some operators may curtail production with the hope of balancing supply with demand and increasing gas prices.

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Permalink Reply by L. Brent Moseley on August 18, 2009 at 3:35

Les, about how long does the flowback process usually last before all the frac materials have been flushed out and one can get an idea of the well's final potential production? There has been no further update on SONRIS concerning the well on my lease since 8/6/09.

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