TMS related news.
In recent quarters, a handful of independent exploration and production (E&P) outfits have touted their acreage in the Tuscaloosa Marine Shale (TMS), a formation that stretches from Texas to Louisiana and Mississippi. The field is far from a new discovery; famed Mississippi wildcatter Alfred Moore spearheaded drilling in the TMS in the 1960s.
The play’s proximity to the Haynesville Shale should make it easier for producers to redirect drilling rigs from the out-of-favor dry-gas play and limits bottlenecks associated with a lack of midstream infrastructure. Despite boasting similar geologic characteristics to the Eagle Ford, the TMS is far from a slam dunk, which explains the low prices that early movers have paid to build an acreage position.
Goodrich Petroleum Corp (NYSE: GDP), for example, amassed about 74,000 acres, paying an average of $175 per acre. Meanwhile, Devon Energy Corp (NYSE: DVN) has accumulated 250,000 acres on the Louisiana-Mississippi border at an average cost of $180 per acre.
Thus far, early movers in the TSM have yet to report drilling results, though management teams have indicated that these tests have been encouraging. Devon Energy recently completed drilling, coring and logging its first vertical well in the play and plans to sink its first horizontal well later this year. Denbury Resources (NYSE: DNR) and its partner EnCana Corp (TSX: ECA, NYSE: ECA) are at a similar stage in their drilling program and plan to sink a horizontal well in September.
During EnCana’s conference call to discuss second-quarter results, Executive Vice-President Jeff Wojahn described its TMS assets as “a promising liquids-rich opportunity” based on “how the rock breaks, the hydrocarbon content and gas in place, and the like.” Management also pegged the drilling costs for its first horizontal well–a 12,000-feet deep vertical shaft with a 7,500-foot lateral segment–at about $8 million.
Meanwhile, Goodrich Petroleum’s CEO provided a bit more color on his outlook for the TSM during the Q-and-A portion of the firm’s Aug. 4 conference call:
We’re very comfortable today with what we see from a geologic standpoint of going ahead and drilling wells. In fact we don’t really even see much need, at least in most of our acreage, for pilot holes. There [are] sufficient amounts of historical vertical wells that have been drilled through the Tuscaloosa Marine Shale that we’re comfortable going out and drilling today. I would characterize at least in our view that the sole or the largest single risk to the play is just one of the economic performance versus well costs. We know the Tuscaloosa is present, sufficiently thick, thoroughly oil saturated. It’s just a little unproven in that no one has drilled yet a well that’s demonstrated in the EUR horizontally that would match up to costs. And that’s just [be]cause there haven’t been really many or any of them out there that have done that.
Drilling results in this frontier play could provide a meaningful upside catalyst for these E&P operators. At the same time, if the play proves uneconomic to produce or drilling results disappoint, the low cost of acreage provides a degree of downside protection.
Post any articles or information you believe to be relative to the TMS.
The falling stock price of GDP was in part probably leaked news about the SLC IP, the rest was falling oil prices and the increase in the value of the dollar - all the sector was hit by that and a big fire at the Coffeyville Refinery in Kansas that lowered demand for crude at Cushing Ok. The rumors of the rate at 800 were spot on, especially if you disregard the gas equivalent added to get to 900 in today's announcement. The big surprise is the 96% oil. The high flare had been attributed to possible increased gas % but that apparently was not the case. I did not compare the amount of gas reported on the SLC to the other wells but a little more gas can slow the decline rate, which is good. The industry worry heretofore has been too much gas in the south and west TMS. It was really a scare when the HK HH well,shallower than the SLC but not far away, had a much higher gas %. I am feeling good about the SLC and W. Fel , at the moment at least. LOL * Sorry to respond so late - I just read your post this morning for the 1st time.
Goodrich announced these recent well results today:
The Company's SLC, Inc. 81H-1 (67% WI) well in West Feliciana Parish, Louisiana has achieved a peak 24-hour production rate to date of approximately 900 Boe/day (96% oil) from an approximate 7,000 foot lateral with 27 frac stages.
The non-operated Lewis 7-18H-1 (17% WI) well in Amite County, Mississippi, has achieved a peak 24-hour production rate to date of approximately 1,500 Boe/day (93% oil) from an approximate 8,100 foot lateral with 29 frac stages.
The non-operated Mathis 29-32H-1 well in Amite County, Mississippi has achieved a peak 24-hour production rate to date of approximately 1,300 Boe/day (92% oil) from an approximate 6,400 foot lateral with 17 frac stages. The Company owns a 6.5% reversionary interest in the well and the right to participate in subsequent wells drilled in the unit.
The Company's previously announced Beech Grove 94H-1 (67% WI) well inEast Feliciana Parish, Louisiana, which had a reported initial rate of 740 Boe/day, achieved a 30-day average production rate of approximately 600 Boe/day (90% oil). The Beech Grove continues to perform very well and has thus far exhibited a flatter decline curve profile. The well is currently producing approximately 550 Boe/day and is currently on the Company's 600 MBoe type curve
Good news today for W. Feliciana with the announcement of the results of the SLC. Even though the 24 hr ip rate was not one of the best at 900 boe, this is why today's announcements are good for W. Fel. :
1.) the choke size on the SLC was very tight at 12/64 vs.18/64 on the 2 higher IP wells announced
2.) the % of oil was 96% - the highest. This is very significant because the worry has always been that the deeper TMS (W. and E. Fel) would have mostly gas - the SLC is the deepest yet at 14k feet vertical depth but has the best GOR yet.
3.) the best well announced today had a 24 hr ip of 1500 boe, but it had a lateral 1100 ft. longer than the SLC and the choke was more open at 18/64
4.) the Beech Grove well in E. Fel. announced a couple weeks ago had disappointed analysts because the 24 hr. ip was low at 740 - but, the good news today is the decline rate is so far flatter than expected and the EUR is still 600K - a very good well.
Thanks Steve that is not just good news for W Feliciana but for the whole play. Good results like this will lead to further investment in the play.
Not too shabby, Steve. So if you're still not leased and if your land is within a certain radius of these new wells, could be you're sitting in the cat bird's seat. In regards to the CUL issue, on one had a landowner wants a good lease and wants to be drilled, and on the other hand a landowner wants reasonable acreage within a unit. Yet if an operator needs the hedge per a CUL, then it seems to me a hungry landowner would understand the profit/risk incentive. Plus, those gerrymandered sections around you aren't a normal grid, either. Some think the CUL horse is already out of the corral, and unless you're a large landowner with lawyer clout or an O&G lobbyist, it's all show. It seems the case has already been made for CULs per state approval to date.
I would much rather allow CULs than 2000 acre units. Where a CUL is involved they would/should pay royalties based on the % of the lateral placed within each unit. Larger units in place of CULs do nothing but allow operators to hold more acreage and keep competition out. Competition is the friend of the mineral owner.
I agree that anyone not yet leased and situated in a prospective area,such as near a good well, should benefit in regard to the value of his minerals. However, so many large blocks of acreage are already leased that there is little competition for the remaining acreage - again, competition is the primary thing that makes the lease terms improve. Ms. landowners are unfortunate in that they can be forced pooled if an operator owns 1/3 of the unit, plus that State has chosen to approve units of over 2000 acres, a double whammy. Louisiana landowners are better protected. CULs can be an important part of that.
Jesse cross unit laterals, CULs, are mainly for the Haynesville Shale. Most all the units formed in the TMS have all been large enough for the longer horizontals lengths. Some IMO are too large. When the operators in the Haynesville Shale tried to increase the size of the units to be larger than 640 acres there was such a outcry from the folks that the operators gave up. Now with all the units formed you have to go to CULs if you want to drill a longer lateral.
I am sure this entire discussion should be moved to another topic area, but, your comment makes me think the people in the Haynesville area are certainly a lot more involved and on-their-toes when it comes to their minerals than those in the TMS - certainly those in some areas of the TMS. Even though the downside of mega units has been pointed out for a while, it still seems like people are sitting around with their finger in their nose, not doing anything about it. The outcry at the operators in the Haynesville is refreshing to hear about. On another battle line, maybe the landowners in St. Tammany will get it eventually and cry out about the hand full of anti-frackers trying to run over them. I hope the silent majority will wake up an pay attention before any more damage is done to the landowners.
Steve gohaynesvilleshale.com was on fire in the summer of 2008. You couldn't keep up with the discussions that were going on. The Haynesville hype started in Caddo Parish at under 10,000 feet, as the play got deeper then the larger units came into play. We had the Austin Chalk back in the 1990s and 1920 acre units at depths of around 14,000 feet. The folks that sold their land and reserved minerals came out smelling like a rose because the minerals are HBP to this day on a lot of property with very little production. Back then most folks didn't know about vertical Pugh Clauses so the operators got from the surface to China.
Video: Goodrich Misses, But Tuscaloosa Output Rises
LA TMS production update thru 6-1-14 reported data
Testing the eastern boundaries into Washington parish. http://www.wwltv.com/news/Fracking-expanding-to-Washington-Parish-2...
The media just can't seem to get enough "fracking", good or bad. Terms such as "frackiing site" and "fracking industry" are ridiculous. It's a surface location or a drill site and the energy or oil & gas industry. Those who can't write a piece without inserting the work "fracking" every other sentence are a poor excuse for professional journalists.