Replies to This Discussion

Permalink Reply by dbob on February 19, 2019 at 14:05

Where in Desoto?

Permalink Reply by Gayila B on February 22, 2019 at 1:54

Logansport area

Permalink Reply by Gayila B on February 22, 2019 at 1:53

Logansport area.

Permalink Reply by Chad Ellis on February 22, 2019 at 4:14

Indigo has sold a portion, or all, of their Arklatex assets.  It is possible that all “deals” are on hold until the new operator has time to review?  When I get back to my office, I will share the new operator information.

Permalink Reply by JMG on February 22, 2019 at 9:38

VERY interesting! Do tell!!

Permalink Reply by Chad Ellis on February 24, 2019 at 4:57

Sorry!  I got tied up and may have forgot!  I received a letter from Brookston Energy announcing their acquisition of Indigo's interests in the Waskom Field(Caddo Parish, Harrison County, Panola County)  This appearently took effect in November 2018.  I know nothing about Brookston.  Their mailing address is in Tyler, TX.  Hopefully they will resume any projects once they get settled in.  

Permalink Reply by Skip Peel - Mineral Consultant on February 24, 2019 at 7:02

Brookston Energy appears to be an operator of marginal wells.  In addition to Indigo, the company has picked up a well from XTO.  I didn't look further because the Change of Operator form contained in the well file shows that the majority of the wells Brookston acquired from Indigo are classed as Incapable Gas wells.  Incapable Gas wells receive certain tax breaks from the state, see explanation below.  Note that 250,000 cubic feet is the same as 250 mcf.  This is the normal evolution of wells that are handed down from operator to operator over time as the well declines.  Brookston Eneregy looks to me like a company that specializes in operating largely depleted wells.

Incapable Gas Well Gas STATUTORY CITATION: R.S. 47:633(9)(c) 1-3/10 cents per MCF for gas produced from a gas well, which is incapable of producing an average of 250,000 cubic feet of gas per day. To qualify for the reduced rate a gas well must be incapable of producing 250,000 cubic feet of gas per day during the entire taxable month.

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Permalink Reply by Steve P on February 25, 2019 at 13:20

I have a tiny interest in a section in western DeSoto Parish in which XTO had drilled an early, disappointing HA well early in the cycle.  They sold that to Brookston, who, as you say, seems to buy very marginal wells on their last legs, and keeps them operating and producing, and, presumably, with their very low overhead, can make a little money out of the wells.

My concern is that I’m interested in having a savvy operator drill a CUL in the area and see if they can make a decent well.  I’m certain that Brookston isn’t going to do that.  But I don’t know if XTO sold “this well” or their leasehold ownership in the section.  Not sure how I find out.  If Brookston bought the leasehold, then I can basically write off this section as having any future value to me, unless they farm out the lease to someone else.  I fear that by the time this section becomes economical, the market for natural gas will be going, going, gone.

I could always send Brookston a letter demanding a release of the lease based on failure to produce in paying quantities, but then the economics of investing in that process becomes an issue.

Permalink Reply by Skip Peel - Mineral Consultant on February 25, 2019 at 13:58

Steve, you're right that Brookston is unlikely to drill a horizontal Haynesville Shale well.  As to their ownership foreclosing the possibility of future Haynesville wells, that would not necessarily be the case.  It would take some digging to reveal whether XTO sold their leases in addition to the wellbore.  Regardless, the one operator per unit policy of the Office of Conservation has been changed to allow a unit operator to continue operating  unit wells while allowing a different company to drill and operate additional Horizontal Cross (HC) wells that include that unit.  There have already been several instances where this has happened.

Permalink Reply by Steve P on February 26, 2019 at 7:28

My interest is just west of Stanley.  For reasons unclear to me, persumably geology, the area around Stanley has not been a good area for HA wells.  Comstock just drilled a CUL just east of Stanley, but I haven’t been able to see what the initial production has been from that well.  The info on Sonris is sketchy.

Permalink Reply by Skip Peel - Mineral Consultant on February 26, 2019 at 8:57

Steve, Jay may be able to provide more detail however the area just south of Logansport has low porosity compared to the surrounding Haynesville Shale fairway.  Hopefully the new wells designs will make some portion of this low porosity area economic.

Permalink Reply by Steve P on February 26, 2019 at 16:31

27 MMCFD is a pretty fair well for a 10K lateral 2 section CUL.  At least to me, that indicates that the problem was the early wells, not the rock.  Is that a reasonable conclusion?  

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