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.

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The Pink Sheet O&G articles are largely paid advertisements run by Internet promotional companies in order to pump up the stock price for their customers.  Avoid investing and take their assertions with a healthy dose of skepticism.  IMO there is little to be gained and much to loose for those who are not seasoned investors. 

thanks for the info, skip and spring branch. 

Devon is company to watch in Tuscaloosa shale

The answer to whether Louisiana’s Tuscaloosa Marine Shale oil formation will see a rapid increase in activity could come Wednesday during Devon Energy’s analyst day, said Doug Leggate, senior U.S. energy analyst with Bank of America Merrill Lynch.

Devon Energy is expected to reveal if it has figured out how to economically produce in the shale formation, Leggate told those who attended Merrill Lynch’s oil and gas industry update Wednesday at Juban’s Restaurant. If so, drilling activity can be expected to accelerate.

“Watch this one very closely,” Leggate said, “because they’re the ones who are going to tell us if this play is working or not.”

In February, Devon officials said the company planned to drill 10 wells in the shale by the end of 2012. Devon has leased more than 265,000 acres in the formation, which straddle’s Louisiana’s midsection.

So far, Devon officials have described the Tuscaloosa Marine Shale as still in the exploratory stages, although the company is optimistic about the formation.

Leggate said Devon bought Mitchell Energy and Development Co., the company that originally figured out how to produce in shale formations.

Devon likes to quietly establish a lease position and then experiment with its production techniques, Leggate said. The process typically takes a couple of years.

Devon along with Encana Corp. hold more than 550,000 acres in the formation, which contains an estimated 7 billion barrels of oil.

Encana has announced plans to drill eight wells during the first half of the year.

Leggate told those in attendance that energy stocks remain an opportunity although the potential for volatile energy prices concern some investors.

He also said that refinery stocks offer investors an opportunity.

The United States has become a net exporter of refined products, such as gasoline, Leggate said. When domestic gasoline consumption dropped, refiners turned to the export market.

The export market will not disappear even if an economic turnaround increases domestic demand, Leggate said.

Meanwhile, some U.S. refineries have closed because companies could not recover the cost to meet environmental regulations.

The remaining refineries already were seeing much higher margins on their products, Leggate said.

Removing additional capacity from the market with summer, when the demand for gasoline is highest, could mean refineries could enjoy even higher margins.

DCM, interesting, to say the least.  Thanks for posting this info.

The Math Behind the 100-Year, Natural Gas Supply Deb 



This is not exactly TMS and not exactly new, but it's a view of what happened with current players in similar situations in the past.



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