Report From a Strategic Planning Group
A friend of a friend of a friend sent this report from a major producer to me. The following is an excerpt that refers to Haynesville that I thought I would share.
As per UBS Analysts - PetroHawk reiterated its intent to operate 12 rigs in the Haynesville in 2009 and sufficiently retain its leases. Well costs have crept to $8.5- $9.5m/well from $8m due to greater frac stages and longer laterals (up to 4,500' from 4,000'), but cost savings could arise from fewer wells per section and the use of spudder rigs to pre-drill. The play is said to exceed IRRs of any shale play in North America and HK (PetroHawk) will benefit from being 70% hedged on estimated 2009 production at $8 floors. 25-30% production growth still seen for 2009 With 60% of their $1 billion 2009 capex plan (vs. our $660m 2009 cash flow forecast) targeting the Haynesville, HK confirms it will generate solid returns in most commodity environments and bring on production growth through 75 wells in the Haynesville in 2009, 8 of which are currently producing 86 MMcfed gross while the average IP rate has been 19.4 MMcfe/d with 80% first year decline rates. Exploration still happening in the EagleFord shale HK has 1 rig dedicated to the Eagle Ford shale in 2009 where they claim to have 3.7 Tcfe of resource potential on their 150,000 net acres. Developmental well costs have come down from $5-$7m to $5-$6m in the area, which could be further helped by service pricing degradation.
As per UBS Analysts - PetroHawk reiterated its intent to operate 12 rigs in the Haynesville in 2009 and sufficiently retain its leases. Well costs have crept to $8.5- $9.5m/well from $8m due to greater frac stages and longer laterals (up to 4,500' from 4,000'), but cost savings could arise from fewer wells per section and the use of spudder rigs to pre-drill. The play is said to exceed IRRs of any shale play in North America and HK (PetroHawk) will benefit from being 70% hedged on estimated 2009 production at $8 floors. 25-30% production growth still seen for 2009 With 60% of their $1 billion 2009 capex plan (vs. our $660m 2009 cash flow forecast) targeting the Haynesville, HK confirms it will generate solid returns in most commodity environments and bring on production growth through 75 wells in the Haynesville in 2009, 8 of which are currently producing 86 MMcfed gross while the average IP rate has been 19.4 MMcfe/d with 80% first year decline rates. Exploration still happening in the EagleFord shale HK has 1 rig dedicated to the Eagle Ford shale in 2009 where they claim to have 3.7 Tcfe of resource potential on their 150,000 net acres. Developmental well costs have come down from $5-$7m to $5-$6m in the area, which could be further helped by service pricing degradation.
Views: 82
Replies to This Discussion
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Permalink Reply by Dorcheated A1 on -
Hello my little snowcone.
You have again brought your sharp sense of humor with you.
Thank you but I do not play golf, I play put-put. -
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Permalink Reply by Les Bamburg on -
Parker, most of the time the well will have 9 & 5/8" or 10 & 3/4" casing down to ~ 2000'. Then 7" or 7 & 5/8" down to the bottom of the vertical section.
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Permalink Reply by Bobi Carr ("parker") on
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Les,
Thanks.
I've been reading a lot on SONRIS. Since it is all greek to me, it sort of runs together.
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Permalink Reply by Dion Warr, CPL on
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Snake:
Thanks for the cred, but I think Les B actually gave the 'why?' behind the minimum 7 - 7 5/8" id casing on the vert (the smaller motors not being as reliable (robust?) as I recall).
Beware, the big-bore vert can be perfed and used to HBP a unit in a pinch (if wait times on the topdrive equipment run past 90 days at or near end of PT of the leases; however, I don't think that is HK's intent here. Good use of resources in a drilling 'assembly line' crews, IMO:
(1) "Drop and drive"
(2) "Hook and lateral"
(3) "Perf and frac"
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Permalink Reply by sesport on
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Dion - this is a dated (2003) resource, but my hamster wheels started turning by some info on p. 9.
http://www.voiceforthewild.org/blm/pubs/DirectionalDrilling1.pdf
"In one Utah project, for example, 143 laterals
were drilled and completed as re-entries from 43
vertical wells. For those 43 wells, 180,000 feet
of wellbore penetrated the pay zone, compared
with only 26,000 feet for all 379 of the previous
vertical wells in the field (Hall 1998)."
Would you imagine, in today's tight economy, and with all these leases sitting on the shelf with an eye on & game plan to drill those nearest to expiration, that some companies might use this as a strategy from losing those leases?
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Permalink Reply by Dion Warr, CPL on
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Sesport:
Oh, don't get me wrong, I do say that it is possible. In fact, Jay (Shalegeo, rip) even stated this on several threads (particularly the 'Who drills your wells" thread where he somewhat eviscerates Camterra for drilling small-bore verts to HBP, rather than lose the leasehold. His point was (paraphrasing), if the O&G company was going to drill the relatively ineffective vertical, at least drill the bigger-bore vertical to facilitate a future HZ completion.
The spudding rigs (rigs capable of drilling the vert) are a much more common resource at this point in the Arklatex than the heavy top-drive rig setups required to do the job of drilling the radius and lateral. HK's strategy (again, IMO) is to utilize the 'specialty rigs' and their rigtime to specifically do the job that the spudding rigs cannot, and use the existing HOSS/CV/LCV-drilling rig inventory and crews to do the prep work, rather than tying up the top-drive rig 100% on one well, spud to completion.
I don't think that HK would adopt drilling more expensive bigger-bore verticals simply to HBP acreage long-term, when others are doing that with smaller-bore verts. My opinion. It is debatable. Smaller companies holding virgin HS with no prior production, maybe.
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Permalink Reply by Snake Stewart on
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Sorry about that Les, if that is the case. I knew it was talked about because of the worries people had about the vert. wells that were HBP that could be used later for laterals.
Hey Dion,
Once I give credit to someone I cant take it back. That would be Indian givein'. :-)
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Permalink Reply by Les Bamburg on
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SS, no apologies necessary because it was someone else that you remembered talking about the casing size. My posts actually came after yours.
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Permalink Reply by Dion Warr, CPL on
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Snake:
Rethinking (and reviewing) your discussion on the matter, credit for the slimmer mudmotor explanation goes to Lerret.
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Permalink Reply by Dion Warr, CPL on
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I'll let the engineers in the group tackle that question. I'm just a landman as far as that goes... (:-{D>)
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