Who can guess the JV partner with SWN

I guess XOM

 

In February, we reached a tentative agreement for a joint venture in our Lower Smackover Brown Dense play in Southern Arkansas and Northern Louisiana that includes cash upfront as well as a 3-year term carry on accelerated investment activity. Our plan includes more active drilling program in the Brown Dense in 2013.

To date, in the Brown Dense, we have drilled and completed 6 wells, and each successive well has shown an increase in initial flow rate. Our latest well, the Doles well, located in Union Parish, Louisiana, had an initial flow rate of 435 barrels per day of 55- to 57-degree condensate and more than 2.5 million cubic feet per day of 1,250 Btu gas. After flowing more than 90 days, the Doles well exhibits producing behavior similar to the BML well.

We've now spudded our seventh well, the Dean horizontal well, located in Union Parish, Louisiana. We believe to -- we plan to drill and complete a 3,000-foot horizontal lateral with initial results expected from this well in the second quarter. This well will advance our further understanding of frac geometry and appropriate landing point as well as cost performance. We're learning more about the play with each successive well, and we are focused on analyzing various methods to optimize our fracture stimulation with a focus on increasing reservoir contact area.

Our results along our path to commerciality continue to progress, and we continue to believe the size of the prize is significant. We remain encouraged about this play, and I look forward to updating you on our efforts to bring this idea to commerciality in the coming months.

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Replies to This Discussion

Permalink Reply by L Davis on February 22, 2013 at 5:19

 I also wonder if there could be more than one JV partner. I also wonder how many companies may already hold some small WI in order to share the data from the wells.  With cost so high, it is hard to believe SWN is picking up 100% of the cost.

Question for the experts. Is there any difference in a JV owner and a WI owner? 

 

 

Permalink Reply by obed w odom on February 22, 2013 at 5:24

Do you mean COP (ConocoPhillips) or COG (Cabot)? I assume the latter but ConocoPhillips was also mentioned above as a possibility.

Permalink Reply by Land Rat on February 22, 2013 at 5:34
I mean ConocoPhillips.
Permalink Reply by North LA on February 22, 2013 at 6:36

I thought you meant cabot. I didn,t realize cop had 200k acres already.

Permalink Reply by Land Rat on February 22, 2013 at 7:35

It's been a very well-kept secret.

Permalink Reply by North LA on February 22, 2013 at 9:23
Is COP looking at the LSBD or is it just coincidence that their 200k acres is over the brown dense? IMHO it would be a big deal if the jv with SWN had deep pockets as they are usually looking for big returns and not marginally profitable ventures.
Permalink Reply by tony allen on February 22, 2013 at 11:44

Where is COP's acreage position?

Permalink Reply by Land Rat on February 22, 2013 at 5:39

The JV partner or partners will take a working interest as part of the deal. The exact terms will vary by the JV, but generally there is a buy-in cost of $X/ac, possibly different amounts for acreage in different areas. The JV will also outline what working interest each partner will have in the well or wells. I would imagine SWN would be carried for a while...as compensation for their initial risk-taking. There will also be an obligation to drill X number of wells and do X amount of science (petrophysics, seismic, well-design, etc). These are very detailed and diligently crafted arrangements which, especially after DWH, will contain explicit risk-apportionment.  Disclaimer: you asked for comments from the experts.  I am not an expert.

Permalink Reply by L Davis on February 22, 2013 at 6:17

Thanks.  That is about what I thought a JV would be. The JV owner would have a greater financial exposure than some of the other type owners.  However, in the end every owner regardless of type ownership ends up with xx% in each well.  As you say, it get complicated on how some of the deals are put together.  

Permalink Reply by Aubrey C. Sanders, Jr. on February 22, 2013 at 6:26

I think maybe Whiting. But good possibility XOM. Tossup!.Let's play ball.

Permalink Reply by Aubrey C. Sanders, Jr. on February 22, 2013 at 7:38

Whiting. Maybe XTO((XOM)

Permalink Reply by ddozier on February 22, 2013 at 10:32
I just don't think whittling is going to bring enough to the table for this play, that said perhaps the active play will be small enough for a jv and eventual farm out if swn doesn't think it's potential payout is high enough....just things that make one go mmmmm

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