Replies to This Discussion

Permalink Reply by Rock Man on September 1, 2021 at 6:31

The heterogeneity referenced all ties back to the "gas in place": in any section that could be effectively stimulated via a lateral well bore. Porosity, gas saturations, brittleness, permeability area all key factors which ultimately impact per well EUR's.

Savvy operators are looking closely at the subsurface information as to the aforementioned factors - and are willing to pay more for better "rock" areas.

So the heterogeneity can be either a positive or a negative as to subsurface potential.

I will also mention the presence of faulting in any area - faults will be avoided since they serve to compromise the ability to drill long laterals and stay in zone. Faulted areas will be "low graded" and essentially ignored as to leasing and drilling.

Permalink Reply by Skip Peel - Mineral Consultant on September 1, 2021 at 7:55

In some cases (Louisiana/Haynesville) there have been some exceptional wells with uncharacteristic decline profiles that appear associated with fault area.  Steve P has a well that we discussed a few years back that had a very shallow decline for a protracted period of time.  From my maps, it was drilled up to but not through a fault.  In the early Haynesville days, faults were a problem and those sections were often passed over by operators.  That changed when the state allowed cross unit laterals (wells designated HC).  Now a lateral of sufficient length could be drilled up to the edge of a faulted area.  I continue to see evidence of this in applications for alternate unit wells in Louisiana where a group of wells have bottom hole locations staggered along a diagonal that has the same approximate axis as the majority of faults in this part of NW LA.

Permalink Reply by Rock Man on September 1, 2021 at 8:58

Good points - fault "zone" or proximity probably creates a more intense naturally fractured zone for a part of the lateral wellbore.

Need some good 3D seismic to play the "lateral vs fault" game - expensive if you misinterpret this relationship.

Permalink Reply by Bill R on September 3, 2021 at 6:47

O & G Speculators must be gambling and scrambling right now... received a phone call at 4:30 A.M. (6:30 in Texas) this morning with an offer to purchase our holdings in San Augustine County, especially interested in our current producing Aethon and EXCO Wells... not the best way to introduce themselves and make an offer to say the least! Don't think my Wife would sell to them right now if they offered me a million bucks! 

With price of Natural Gas up and climbing, has anyone heard any rumblings of new O & G Permits in San Augustine County? Surprised with the sudden large uptick in offers in the past two months and being out here on the Oregon Coast makes me about as removed as someone from New York City would be!

Any and all input would be appreciated!  Thanks! 

Permalink Reply by Skip Peel - Mineral Consultant on September 3, 2021 at 7:22

The main reason for current interest:  natural gas is popular.  This is evident from all the Haynesville focused acquisitions.  Southwestern acquiring Indigo.  Chesapeake acquiring Vine.  Goodrich adding that modest amount of acreage.  Most areas with proven rock and significant unrecover reserves are seeing an up tick in offers.  The company making the offer wasn't Maven by any chance?  That sounds like their MO.

Permalink Reply by Rock Man on September 3, 2021 at 7:40

Some info for San Augustine Co players of interest

Attached is list and map showing all the Hz permits in this county over the past year - total of 8.

Also attached is a PDF showing active Hz Haynesville Shale production - all focused in the northern part of the county.

Keep in mind that these companies making offers for minerals are playing mostly a long term financial game.

Yes, increase in gas prices will give anyone with HV minerals a big positive bump (especially with 20 MMCF+ early flow rates), but the big money on buying minerals (in my opinion) is to get the gas in the ground that has yet to be drilled and completed.

Once a unit has a productive well, there is no reason for operator to do anymore drilling to maintain the unit - it is HBP (held by production). That additional gas from undrilled wells (which could be 3-6 or more wells per unit) will be adding value to the minerals 10-20-30 or more years down the road.

 Note - all attached info from ENVERUS site.

Attachments:

• San Augustine Hz permits past 365 days.pdf, 3 KB
• San Augustine Hz permits past 365 days map.pdf, 2.1 MB
• San Augustine Co Hz Haynesville Shale Production.pdf, 2.1 MB

Permalink Reply by Andy Franklin on September 3, 2021 at 9:09

Bill - The number of offers we are receiving in San Augustine Co. in the last couple of months has increased 6x from previous years. I’m assuming the uptick in gas prices has something to do with it.

Skip - Maven is one of the companies we regularly receive letters from.

Something that perplexes me a bit is the number of interested parties to buy minerals in the area, but as of last weeks rig reports seen on the general forum there was no a single rig running in San Augustine Co. 

Permalink Reply by Skip Peel - Mineral Consultant on September 3, 2021 at 10:42

Maven often has "associates" place phone calls to mineral owners that's why I thought they would be the one calling Bill R at 4:30 in the morning.  Most companies just send letters.

Permalink Reply by Skip Peel - Mineral Consultant on September 4, 2021 at 1:26

LOL!  I agree on the 4:30 am call however unless I see an uptick in San Augustine directed Haynesville capable rigs, I'm going to stick with my hunch that the increase in offers is about good rock, remaining reserves and a preference for natural gas as opposed to any insider specific knowledge on drilling plans.

Permalink Reply by Bill R on September 3, 2021 at 16:53

Andy - Yes... about 6x the normal request of offers and I am assuming the uptick is probably due to increase NG prices. However, this high degree of interest in Quirk does have my hackles twitching a bit. We have gotten two or three interested speculators asking about many of our other family holdings, but it has been twice that or more for Quirk holdings. 

Skip - Not sure, sounds like Maven, but this caller said they were calling for an 'interested party' and only have a phone number (214) 273-0123... all others have been via mail, except one Landman who said they represented BP and wondered if I would be interested in selling outright instead of leasing... 

Rock Man - I was wondering if Rigs were rolling in and being staged again. All of the sudden interest mainly in Quirk sort of peaked my curiosity... way more than with any of our other holdings out there.

And in general, I would like to say that a call at 04:30 from anyone other than someone asking if I'm ready to go fishing is not a great way to win friends and influence enemies! 

Permalink Reply by Rock Man on September 3, 2021 at 9:25

See my comments about what mineral buyers are looking for. Future $$$ flow. It is inevitable that HV in SA will get drilled up eventually.

Plus rig presence drives up sellets' numbers

Permalink Reply by Rock Man on September 4, 2021 at 13:00

Reasons for mineral buyers ramping up in SA as well as other Haynesville Counties can be easily seen in the attached PDF listing of the 228 historical HV wells in SA county.

Wells sorted by date of first production - newest at top / oldest at bottom of the 21 page PDF.

Since first HV well in May 2009, over 1.25 TCF of gas produced. 

Present production approximately 567 MMCF per day.

Check some of the various data points points on this ENVERUS sourced PDF - production rates over 20 MMCF per day and cum production in the high teens BCF (and more).

This is just up to date production - not EUR projections. Some of these 20 BCF cum wells are still making over 7 MMCF of gas per day.

Biggest issue in my opinion as to ham stringing production here is pipeline capacity.

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