Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on July 7, 2011 at 8:47

Jeff, EnCana has allowed drilling permits to expire in Sections 11, 28, 30 & 33.  In addition they have two wells status code 33 (Shut-In Productive - Future Utility).  I do not expect EnCana to be drilling any more wells in 12N - 9W for the foreseeable future.  A non-producing well can not hold a lease after the expiration of the primary term.  After the primary term a lease covering a producing but shut in well may remain in force only if the lease terms provide for shut-in payments and period.

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Permalink Reply by Robert Duke on July 7, 2011 at 9:22

Hi Skip,

This is taking this conversation in a slightly different direction, but still relevant to this area of the play (SE corner of RR Parish).  Indications from PHK suggest very reasonable quality shale for Bossier in this area, though the Haynesville results have been "less than phenomenal".  Given that the original leasehold was pretty cheap in this area, seems to me that sometime over the next few years, nailing down Bossier resources would be long-term profitable for an operator.  The "fly in the ointment" associated with this is that other areas may be both cheaper to develop (like Marcellus) and more profitable (like stacked HA/BO); still operators are likely walking away from 6+ BCF wells in this area for the Bossier, I gather from the PHK data.  Any insights appreciated;  I have a well in the area that looks to me likely to be HBP for about 10 yrs, given that it is producing at a bit less than half the rate of a good HA well; I am hoping that in that time period, Encana/Shell will find it worthwhile to go after the Bossier, or if they let the lease lapse, someone else would be interested in picking it up for the Bossier potential alone; I do understand that where the plays are stacked, the potential is REALLY good, but there are a lot of areas of the HA developed already with marginal Bossier potential.

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Permalink Reply by Skip Peel - Mineral Consultant on July 7, 2011 at 10:23

Robert, the Mid-Bossier is not well defined owing to a small number of completions.  I think it will prove superior to the Haynesville in certain areas of the Play.  The problem is that right now it's just more dry shale gas in a market awash in supply.  Yes to future development interest by ECA/SWEPI or other operators but that depends on price and none of the projections I see make that likely in the  short term.  Many who wished for another chance to lease will get it.  I just hope they are prepared to be patient.

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Permalink Reply by Jeff on July 8, 2011 at 10:20

Skip,

Please explain the difference between shut in productive and non producing.  Thanks for the info

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Permalink Reply by Skip Peel - Mineral Consultant on July 8, 2011 at 11:07

Non-producing = incapable of economic production, the lease terminates if past the primary term.  Shut-In productive = can produce but operator has chosen to shut the well in, must pay shut-in rental under the terms of the lease to maintain the development rights.

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