Replies to This Discussion

Permalink Reply by J N on May 3, 2012 at 10:33

Thanks for the info! I think the question now is whether this play will shift focus into north LA or if SW Arkansas will remain a point of interest. Here's hoping good things for both areas!

Permalink Reply by flex auger on May 3, 2012 at 10:40

Yeah was just reading that, long way from 800 forsure, but didnt muller say he would be kinda happy with 200 back on the annual call? Because he thought they could "work" it up some. Stating at 300 instead of 200 to "work it up" gains a little.

Permalink Reply by Robert Carr Head on May 3, 2012 at 11:07

The discussion was fun anyway. As long as we know it was a rumor. I doubt that anyone expected full accuracy.

301 bpd is almost three times the Atlanta well , they seem to be going the right direction. I hope their yields continue to improve.

Permalink Reply by Matthew Kable on May 3, 2012 at 11:30

Did anyone else notice the statement in the press release that SWN plans to increasing capital investment in the Brown Dense in 2012?  That's a positive. Here's their exact statement:

"The company expects its capital investments program for 2012 to be approximately $2.1 billion, a decrease of approximately 5% compared to 2011.  Southwestern is currently planning to shift approximately $50 million of additional capital  investments into New Ventures in 2012, in particular into the company's Brown Dense play"

 

http://www.swn.com/investors/Press_Releases/2012/2012-05-03.pdf

Permalink Reply by Matthew Kable on May 3, 2012 at 11:35

...they went on to say that they would be using the additional capital for additional leasehold acquisition and potentially adding an additional rig in the 3rd quarter. 

 

Permalink Reply by Bradley McWilliams on May 3, 2012 at 14:18

I know it's not worth a whole lot right now, but don't forget that they said they are getting 1.2 mmcfd.  Think about it, that was actually worth something a few years ago...

Permalink Reply by Sarah Randolph on May 3, 2012 at 16:11

I would like to have 301 pbd on my property; doesn't sound so bad to me.   Do hope they use a part of their reallocated capital budget for more rigs--one rig on 540,000 acreas is going to take a while, even with one more possibly on the way in the third quarter. 

Permalink Reply by Skip Peel - Mineral Consultant on May 3, 2012 at 16:37

300 BOPD per well is not sufficient to sustain a horizontal play.  The well payout would be longer than the industry will accept.  Particularly with an unknown EUR per well.   Something north of 600 BOPD may be enough depending on well cost.  SWN has invested too much to stop now and they are gaining experience with each new well.  Another rig would be most welcome however with the majority of Brown Dense leases being 4/4 terms SWN has a lot of built in wiggle room for future considerations.  The third quarter is less than sixty days away.  I expect that we will see an increase in unit applications before this month is out.

Permalink Reply by Les Bamburg on May 3, 2012 at 17:22

Skip, there is not sufficient information to determine the economic viability of this type well.  Remember the associated gas is likely high in gross heating value and NGL content which adds gross revenue.  There are other oil plays with similar production rates. 

Permalink Reply by Ed on May 3, 2012 at 18:26

Maybe some condensate in the oil with it 52 API.

Permalink Reply by Les Bamburg on May 4, 2012 at 3:03

Ed, I agree.  It is hard to tell if this is a "gassy" oil or "oily" gas well with the fluid gravity and a GOR above 5600. 

Permalink Reply by Big McInnes on May 3, 2012 at 19:46

If the average well cost for the lsbd becomes 7-10 M per well, 300 bopd sustained for a 6 to 12 month period would make this play more than economical depending on what the decline curve in production may be. If it declined to 250 bopd and sustained production for another 6 to 12 months the well could pay for itself in under 2 years. After that over 80 % of the proceeds goes to the oil mans pockets and even if it declines all the way to 50 to 100 bopd after payout 5k to $10k/day is good for a companies mailbox money, especially if they can do it 4 to 6 times per section. Only time will tell, also remember they may be able to work this well into producing more than it is now. They still have not recovered 50% of their frac fluid. This is a good development, nothing negative about it as it is only attempt #2.

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