N. LA. Haynesville Activity Slows to a Crawl

Per a review of Sonris, N. LA. Haynesville well activity is virtually nonexistant. Over the past 2 weeks no new wells were spud, only 1 well was completed, and no wells were converted from "drilled & completed" status to "producing" status. In fact, the only Haynesville actvity was the filing of 24 new drilling permits. This is the obvious result of low gas prices. Operators will continue to delay discretionary activity so long as gas prices are low. With the tremendous high IP rates followed by rapid decline, rational operators will delay turning on wells now in hopes of selling gas at higher prices. They will also delay spudding any wells except for those necessary to meet drilling contract obligations, or to hold onto valuable acreage. In this case the interests of the oil companies and that of the landowners are aligned. Don't expect things to pick up until gas prices do!

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Permalink Reply by Skip Peel - Mineral Consultant on March 27, 2009 at 11:06
And keep in mind that regardless of the economics, leasehold not Held By Production must be produced prior to lease term expiration or be lost. Much of that undeveloped acreage was acquired at relatively cheap lease bonus prices. Even with a depressed economy and weak energy markets, I doubt many land/mineral owners would agree to an extension or sign a new HA lease for the $250 to $350/acre bonuses that secured those leases two and three years ago.

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