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.
High expectations and inconsistent completion time (IMO)
are part of the dip in HK and GDP stock. But, the DOW lost 600 points and the price of a barrel of oil lost almost $6.00
just this week. that's the biggest culprit. I hope! a nervous
I totally agree. The TMS oil will not be left in the ground. At some point the price of oil and/or the development of better technology will put the TMS in full development - I just hope it will be before I am too old to enjoy it. LOL
As far as stocks go and their correlation to TMs news, I follow a few operators that are in the Mississippi Lime Play and they are all taking a hit right now as well. The steady decline in stocks over the past 2-3 wekks may have more to do with intability in other countries more than people losing faith in these companies abilities. Im about as uninformed as they come when talking about stocks but just food for thought.
As Skip stated, GDP has gone all in and I really like their dedication although I was burnt by Sandridge Energy's all in attitude under CEO Tom Ward in the Mississippi Lime. This was a shale play that even big name Shell bought into and has turned into a dud. Hk & GDP are the only 2 that have plans on possible adding rigs to the play in the future. Floyd talked about the acquisition of the Natchez land yesterday and really downplayed how much of an investment into the TMS it is.
Would love to really pick the brain of some of these top guys
Strictly from a business strategy stand point, it is never a good idea for an E&P company to risk their future on one emerging prospect. It may be appreciated by those with a stake in that prospect but it is a red flag to managers in the industry and to savvy energy investors who find it highly risky.
Whether any of the current players bring in additional rigs or not there will be at least one more rig and wells drilled in yet unproven locations by Comstock in the near future. Although Comstock is a smaller company and doesn't get a lot of press they have a good bit of horizontal development experienced and proved to be a capable Haynesville Shale operator.
This question is kinda off topic but why is there always a hold up waiting on frac crews. It seems like this happens way more than it should. I would think Halliburton would make sure they have enough crews to cover everything
It is difficult to keep a frac crew busy in the TMS. Just not enough wells being drilled compared to EFS and Bakken for example. No service company is looking to base a dedicated frac crew in an area where there is insufficient work to keep them busy.
Industry wide there just aren't enough frac crews. While almost every shale play has seen drastic decreases in drill times, sometimes the number of days have been cut in half, I have not seen any real decrease in the time it takes to frac a well.
Anyone heard any news in last few days regarding the EnCana Sabine well just outside of Liberty?
Is coring still going on? Test result rumors?
Im holding out hope that some of these border wells to the north (Smith, Turnbull, Morris) are good enough to keep interest south of the Miss line along with the Baker Creek Units and Spillman. I dont think the Feliciana's are done but you are right about the TMS having lots of competition and to add to that, the Florida Parishes have even more competition within the TMs with some proven Mississippi areas. I feel partially responsible for these less than stellar reports. See, I bought some stocks when things were looking good and they havent looked that good since lol. Ive single handedly jinxed the TMS
Hahahaha, me too......
I believe quite a few more wells will have to be drilled.
So I am not the only one that controls the stock market? That Buy Low /Sell High rule seems hard to follow. LOL