Frisco startup buys rights to drill for oil in 100,000 acres of Northern Louisiana

Written byMaria Halkias, Retail Writer   dallasnews.com

A new energy company based in Frisco has purchased oil and gas assets and drilling rights for more than 100,000 acres in northern Louisiana and southern Arkansas.

Frisco-based Velandera Energy Partners LLC was formed by investors of Texas private equity firm Schanti Partners for the purpose of buying the assets from Spring-based Southwestern Energy Co. 

The price wasn't disclosed, but it was an all-cash transaction, and Velandera plans to acquire more oil and gas assets, said Manish Raj, chief financial officer of Velandera and a Schanti principal.

Velandera plans to spend $100 million to drill 20 additional wells, Raj said. 

Southwestern Energy told Bloomberg News that it had invested $600 million in the property.  It's been selling assets and plans to focus its drilling in the Appalachia region, a spokesman told Bloomberg. 

"While all the attention has been on Texas' Permian Basin, we think it's very expensive," said Raj. "Northern Louisiana is also oil-rich and equally as attractive with less competitive pricing."

The present value of the proven oil and gas reserves that Velandera purchased is more than $600 million.

Velandera has 3D seismic images of the reservoirs that gave the company confidence to make the purchase and to develop a drilling program, Raj said. He has extensive oil and gas investment banking experience, having worked on the financing for more than $25 billion worth of deals while at Deutsche Bank and Credit Suisse.

Despite the crude oil price decline, American shale drillers have continue to challenge international producers. 

Over time, the industry has become more efficient with shale drilling, Raj said, and companies can be profitable as drilling costs have come down. 

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Replies to This Discussion

Organization Id

Organization Name

V030

VELANDERA ENERGY PARTNERS LLC

 

Cnt

Well Serial

Well Name

Well Num

Status

Class

Class Type

API Number

Org ID

Field ID

Permit Date

Sec-Town-Rng

Parish

 

1

243882

L SMK RA SUA;GARRETT 7-23-5 H

001

35

17027224820000

V030

5964

27-SEP-11

007-23N-05W

14

 

20200

2

244319

L SMK RA SUA;BML PROP 31-22-1H

001

10

17111256220000

V030

7145

18-JAN-12

031-22N-01W

56

 

19892

3

244945

JOHNSON 21

001

35

17111256240000

V030

7145

25-MAY-12

021-22N-01W

56

 

10398

4

244952

L SMK RA SUG;DEAN 31-22-1

001

10

17111256250000

V030

7145

29-MAY-12

031-22N-01E

56

 

10437

5

245093

L SMK RA SUA;DOLES 30-22-1 H

001-ALT

10

17111256260000

V030

7145

27-JUN-12

030-22N-01W

56

 

20008

6

245963

L SMK RA SUG;DEAN 31-22-1

002-ALT

33

17111256280000

V030

7145

08-FEB-13

031-22N-01E

56

 

14100

7

246229

L SMK RA SUA;SHARP 22-22-1

001

10

17111256310000

V030

8936

04-APR-13

022-22N-01E

56

 

9900

8

246894

L SMK RA SUA;HOLLIS 27-22-3

001

31

17111256230000

V030

6922

22-AUG-13

027-22N-03W

56

 

11429

9

247010

L SMK RA SUB;PLUM CREEK13-23-2

001

35

17111256300000

V030

0689

20-SEP-13

013-23N-02W

56

 

9476

10

247320

L SMK RA SUA;MILSTEAD 15-22-1

001-ALT

35

17111256340000

V030

8936

02-DEC-13

015-22N-01E

56

 

10000

11

247476

L SMK RA SUC;BENSON 27-22-1

001

10

17111256350000

V030

8936

10-JAN-14

027-22N-01E

56

 

10000

12

247477

L SMK RA SUB;PLUM CREEK23-22-1

001

31

17111256360000

V030

8936

10-JAN-14

023-22N-01E

56

 

10000

13

250119

L SMK RA SUE;BALLARD 20-22-1

001

10

17111256410000

V030

8936

14-MAR-17

020-22N-01E

56

 

10662

Nice to see this group going all in on the Smackover Brown Dense. Their head engineer (Peter Oyowole) is ex BP and now president of ProLine (must be holding joint positions). I see this as an alliance of at least two groups to try to monetize this play concept.

Wow, this is some great news. Though trying not to get my hopes up too high like we have several times in the past.

I really do hope they can turn this into something more than SWN did. I feel like SWN bet the farm and tied most of their capital up in leasing thinking this would be the next BIG BASIN before getting proven results across what they thought was the economic fairway. LSBD does not have the big consistent economic footprint like other areas that gained national attention but, IMO it does have very good hotspots that hopefully were picked up on 3-D seismic that would resemble isolated areas similar to the traditional Smackover formation that are economical. From what I've heard or read this would be ancient reefs or lagoonal areas(think about a small lake)  but have proven to be predominately very high in H2S concentrations so there is the added cost of stripping the H2S on site or taking a very big hit from midstream companies and letting them deal with it.

It will be interesting to see if Velandera only focuses on the "unconventional" Brown Dense (Lower Smackover) source rock play or extends its efforts into the more traditional Upper Smackover play (not source rock but traditional P&P reservoirs). This is where the 3D could come in handy. Plus the 3D - if it is of high enough quality - may be used to rock property mapping in the Brown Dense (e.g. most brittle, organic rich, etc.).

There is no doubt that the Brown Dense has a lot of O&G associated with it - it is the primary Jurassic source rock in the ArkLaTex and has been the main source rock for the Smackover production in that area (as well as some shallower formations). Key like in any "unconventional play is "cracking the code" and figuring out which areas (if any) at best to pursue for horizontal drilling and stimulation.

Side note on Smackover and H2S - the presence and variability of H2S in the Smackover is an interesting situation. It can range from 90+% (some areas in E Tx) to almost zero depending where you are in the trend.

Back in the 90's when sulfur prices were decent (e.g. over $30 per ton), the gas processing plants would have large mounds of sulfur ready to go into tank cars for sale as a by product of stripping out the NGL's from the Smackover gas stream.

And sometimes other inert gas can be prolific in the Smackover - in E Tx (Aker Field), the Smackover gas stream is composed of Methane and nitrogen (up to 30%).

Difficult to explain these gas quality anomalies.

Of the six producing wells listed (Status 10), 2 are horizontal completions and 4 are vertical completions.  The Brown Dense discovery well was a vertical completion with cumulative oil production of 131,000 barrels.

Attached is some info from Drilling Info on some of the Velandera Smk Brown Dense operated wells. As in any play - and unconventional plays especially - there is a lot of variability in the subsurface that impacts well results. Just based on the gas to oil ratios from cum production numbers, there is a bit swing in GOR and then in turn economics. And as the map shows, these wells are spread out through this Parish - where is the sweet spot for best EUR / economics/

The answer is in the data. Hopefully Velandera has all the technical info (core, logs, analyses) and operational info (drilling reports, frac reports, etc) to try to put together the puzzle to determine where to best exploit this known O&G resource.

Attachments:

I can recall some local SWN employees saying the company had a "can't miss" air about it after the home run of the F'ville.  Almost as though some believed they were above making a wrong guess...

SWN did crush it on the Fayetteville and then tried to find the next unconventional play in many different areas - with minimal success. Their essentially avoiding the Permian in the early part of that "shale" development was probably a mistake but - as I understand it - they were looking for "shale plays" in areas that were not in the mainstream. And these did not pan out.

SWN has a GREAT staff for some time - but retirements, layoffs, and people leaving to find different opportunities killed their main resource, i.e. great technical staff.

I do believe they were looking for "not in the mainstream" plays.  The F'ville was just that, and they were hoping to replicate it.  The LSBD was thought to carry on in that, but didn't work to their expectation.  They also tried for the DJ basin in north west CO, which I think had limited success, they also drilled some really deep post holes around Colorado Springs, also in Utah, and in Montana, as I recall.  Don't even need to bring up the Canadian exercise in futility...

As for personnel, I used the phrase on a different thread of their "machine".  Certainly the folks they had in place to steer that machine was impressive. Mostly all gone now.  Their main field office is a ghost town, saw the last of the SWN Drilling Co. rigs being moved out just last week.

They've got a pretty nice web site.  It list SWN as a "strategic partner".  Seems SWN is a minority interest holder in it still?  Before everyone was laid off in the F'ville last June I was told that deal was done.  Took a while to become public.  Hoping for the best for all involved.

The one manager of Velandera is ex-SWN. One has to figure that the G&A / Overhead for this new group will be much lower than SWN's. Various "strategic alliances" may also come into play here to optimize results (e.g. the ProLine Engineering tie).

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