Tuesday, March 3, 2015

Haynesville Rig Count: -1 to 23

The Haynesville Shale rig count was down one last week to 23.  Louisiana was down one rig to 12 (BHP Billiton/Petrohawk dropped a rig, which was picked up by another producer and moved to Lincoln Parish) and Texas was unchanged at 11.


Friday, February 27, 2015

U.S. Rig Count: -43 to 1,267; Gas Rig Count Lowest since May 1993

The Baker Hughes U.S. rig count was down 43 this week to 1,267.  Oil rigs were down 33 to 986, gas rigs were down nine to 280 and miscellaneous rigs were down one to one.  By type, horizontal rigs were down 33 to 946, vertical rigs were down nine to 194 and directional rigs were down one to 127.  Among gas rigs, horizontal rigs were down four to 210, directional rigs were unchanged at 44 and vertical rigs were down five to 26.


While everyone is focused on the plunge in oil rigs (down 589 rigs, or 37.4% over the past 12 weeks), nobody is paying attention to the fact that the gas rig count is at its lowest point since May 7, 1993, almost 22 years ago.  A kid could have been born, educated and graduated from college in that time span.

Thursday, February 26, 2015

EIA: Gas in Storage -219 Bcf to 1.938 Tcf

The EIA reported this morning that working gas in storage was down 219 Bcf to 1.938 Tcf.  The weekly withdrawal was 87% greater than last year (-117 Bcf) and 67% higher than the five year average (-131 Bcf).  The current storage level is now 42.3% above last year (1.362 Tcf, a difference of 576 Bcf) and 1.5% below the five year average (1.968 Tcf, a difference of 30 Bcf).


With the big withdrawal this week, the deviation is back below zero...for now:

Wednesday, February 25, 2015

Chesapeake Reports Year End Results

Chesapeake Energy reported its year end results today.  You can read all about it here (press release, presentation), but I'll cherry-pick the relevant Haynesville stuff.  I guess the biggest item of note is that CHK is actually talking about the Haynesville again.  They were so intent on following the herd into liquids that the Haynesville has barely warranted a mention in recent investor materials.  In recent months, we've seen greater attention paid to the Haynesville by several companies (i.e. Comstock) that have realized that enhanced drilling and producing techniques allow them to yield pretty decent economics on Haynesville wells.  I'm not a bitter man, so I'll try not to dwell on this or say, "I told you so."

EXCO Reports Year End

EXCO Resources reported its year end results today (see page 7 for Haynesville highlights). We've already reported on most of the highlights, including 2015 capital plans, but I wanted to note a couple more things:

  • EXCO is the first company in a while to talk about the Mid-Bossier Shale, the shale layer above the Haynesville.  The company drilled Mid-Bossier test wells in Louisiana (1) and Texas (3) and says it is pleased with results.  I'm behind in reporting TX and LA completions, but I'll make sure to note the Mid-Bossier completions when I pick them up.  

Tuesday, February 24, 2015

Haynesville Shale Rig Count: +1 to 24

Over the past two weeks (sorry, I missed a week with the Mardi Gras holiday), the Haynesville Shale rig count was up one to 24.  As promised, EXCO moved its last two rigs from Louisiana to Texas to give it three there.  For the past two weeks, Louisiana was down those two rigs to 13, while Texas was up three to 11 (the two from EXCO and another from Anadarko).  Last week marks the highest Texas rig count since Feb 7, 2014.


A Whole Bunch of New Texas Permits

1/5/15 - 2/23/15:
  • Bears DU #H 2, XTO Energy; Carthage Field (Haynesville Shale), Shelby Co., Survey: ALFORD, MA, A-969 
  • Bears DU #B 2SL, XTO Energy; Carthage Field (Haynesville Shale), Shelby Co., Survey: ALFORD, MA, A-969 

Monday, February 23, 2015

Chevron Pulling Back on European Shale Gas

When we first started talking about shale gas, what seems like eons ago, one of the exciting potential shale locations was Eastern Europe, specifically in Poland and to a lesser degree in Romania and Ukraine.  Chevron was behind most of those efforts, but the company announced this week that it is pulling out of Romania after having shut down in Poland and Romania, citing it as a business decision.

Big Oil and shale gas prospecting is a bad match.  The degree of difficulty in European shale gas is high, and it's not a matter of technical feasibility.  Big Oil loves technical problems where they can deploy hundreds of engineers and loads of money.  What they have in Europe is a bucket of hassle without the clear return.  There is no whale there.  That's not to say there isn't a potential for shale gas production, it's just a bad fit for a Major.

Saturday, February 21, 2015

U.S. Rig Count: -48 to 1,310

The Baker Hughes U.S. rig count dropped 48 this week to 1,310, the lowest level since January 2010. Oil rigs were down 37 to 1,019, gas rigs were down 11 to 289 and miscellaneous rigs were unchanged at two.  By type, horizontal rigs were down 46 to 979, vertical rigs were down seven to 203 and directional rigs were up five to 128.  Among gas rigs, horizontal rigs were down 14 to 214, directional rigs were unchanged at 44 and vertical rigs were up three to 31.

Thursday, February 19, 2015

EIA: Gas in Storage -111 Bcf to 2.157 Tcf

The EIA reported that working gas in storage was down 111 Bcf last week to 2.157 Tcf.  The weekly withdrawal was 55% below last year (-247 Bcf) and 38% lower than the five year average (-180 Bcf).  The current storage level is now 45.8% higher than last year (1.479 Tcf, a difference of 678 Bcf) and 2.8% above the five year average (2.099 Tcf, a difference of 58 Bcf).  This marks the first time since November 29, 2013 that the current level has been higher than the five year average.


Friday, February 13, 2015

A Couple of Encana Re-Completions

Encana filed a couple of Haynesville re-completions from December:

  • Jackson Davis 23 H #1, Encana Corp.: 2.242 MMcf/day IP on 15/64 in. choke at 4,424 psi; Perfs: 12,068-16,123, length: 4,055 ft.; Caspiana Field, DeSoto Parish, S26/T15/R14; res. A, serial #239578 
  • Jackson Davis 24 H #1, Encana Corp.: 4.309 MMcf/day IP on 14/64 in. choke at 5,536 psi; Perfs: 12,061-16,070, length: 4,009 ft.; Caspiana Field, DeSoto Parish, S26/T15/R14; res. A, serial #239786 

Recent Louisiana Completions

A couple of weeks worth of completions:
  • Caspian 24+13-15-12 HC #1-ALT, Chesapeake Operating: 12.305 MMcf/day IP on 18/64 in. choke at 7,090 psi; Perfs: 12,097-17,341, length: 5,244 ft.; Caspiana Field, Caddo Parish, S13/T15/R12; res. B, serial #247719 

U.S. Rig Count: -98 to 1,358

The Baker Hughes U.S. rig count was down big again this week, dropping 98 rigs to 1,358.  Oil rigs were down 84 to 1,056, gas rigs were down 14 to 300 and miscellaneous rigs were unchanged at two.  By type, horizontal rigs are down 63 to 1,025, vertical rigs are down 23 to 210 and directional rigs are down 12 to 123.  Among gas rigs, horizontal rigs are down 11 to 228, directional rigs are up two to 44 and vertical rigs are down five to 28.


Over the past ten weeks, oil rigs are down 519 rigs, or 33%.   During that time, horizontal rigs are down 25%, vertical rigs are down 41% and directional rigs are down 38%.

Thursday, February 12, 2015

EIA: Gas in Storage -160 Bcf to 2.268 Tcf

The EIA reported this morning that working gas in storage was down 160 Bcf last week to 2.268 Tcf.  The weekly withdrawal was 32% lower than last year (-234 Bcf) and 10% below the five year average (-178 Bcf).  The current storage level is now 31.4% higher than last year (1.726 Tcf, a difference of 542 Bcf) and only 0.5% below the five year average (2.279, a difference of 11 Bcf).


More on Comstock Quarterly Report

After the post on Comstock the other day, I had the chance to review the transcript of the quarterly conference call and wanted to elaborate on a couple of points.

First, Comstock announced back in December that it was moving two operated rigs from the Eagle Ford to the Haynesville.  Since then, natural gas prices have dropped and have been hovering in the upper-mid $2/MMBtu range.  If gas prices continue to stay low, Comstock might drop one of those two rigs.  It wouldn't happen until mid-year when the first lease expires and it wouldn't be until after the company has had a chance to evaluate its first run of drilling with the new completion methods.

Tuesday, February 10, 2015

Refracking All the Rage

I've received a handful of inquiries in the past few months about refracking in the Haynesville Shale.  The answer is that I have seen a few refrac completions reported but not nearly as many as I suspect there have been.  Just today, I've noted that EXCO (six refracs to date) and Comstock (planning 10 in 2015) are delving into refracking as part of their 2015 Haynesville capital plans.

Everyone else is talking about it, but I suspect they are mostly grasping at straws right now to try to figure out the economics and to make it a consistently repeatable process.  There was a good article on Bloomberg on the subject yesterday.  I suspect that refracking will follow the trajectory of the shale gas drilling and completion learning curve but with a tighter time frame.  If refracking can be perfected (or at least improved), it will be a great way for companies to generate better return on investment than spudding new wells in a low gas price environment.

Comstock Retreats to Haynesville Shale to Find a Silver Lining

As we've noted previously, Comstock Resources has retreated from its oil-based business plan to find the love for natural gas again.  It's a purely economic decision, I assure you.  The company has moved two rigs from the Eagle Ford Shale to the Haynesville Shale in the past couple of months and plans to spend 60% ($185 million) of its 2015 drilling and completion capital budget on the Haynesville, where it plans to drill 14 wells and refrac 10 others.


Comstock has found religion with the enhanced recovery methods that have been pioneered by other Haynesville players in recent years and is looking at drilling wells with 7,500 foot laterals that will span one and a half sections and pour lots more proppant and fluid into the hole.

EXCO 2015 Capex Budget to Focus on Haynesville

EXCO Resources released its 2015 capital budget yesterday.  The company plans to concentrate its efforts in the Haynesville Shale this year, allocating 70% of its $215 million drilling and completion budget to the area (the total capex budget is $275 million).

Summary of 2015 EXCO Resources Capex Budget
                     
   
($MM)
Gross Wells Spud
Net Wells Spud
Net Wells Completed
Drilling & Completion Other Capital Total Capital
ETX/NLA 25 11.9 17.6 $150 $8 $158
S Texas 23 7.1 10.7 59
 
7 66
Appalachia 2 0.7 0.5 6 8 14
Corporate         37   37
Total 50   19.7   28.8   $215   $60   $275

Haynesville Rig Count: -1 to 23

The Haynesville Shale rig count was down one last week to 23.  Louisiana was unchanged at one, while Texas was down one (Anadarko) to eight.


Friday, February 6, 2015

U.S. Rig Count: -87 to 1,456

The Baker Hughes U.S. rig count was down 87 rigs this week to 1,456.  Oil rigs were down 83 to 1,140, gas rigs were down five to 314 and miscellaneous rigs were up one to two.  Since the oil rig count started plummeting over the past nine weeks, it is down 435 rigs, or 27.6%.

By type, horizontal rigs are down 80, vertical rigs are down two to 233 and directional rigs are down five to 135.  Among gas rigs, horizontal rigs are down one to 239, directional rigs are down seven to 42 and vertical rigs are up three to 33.


Look how the dark gray line (oil rigs) mimics the crash in gas rigs in 2009 (blue line).  It might even be steeper, although I don't think it will dip as low as gas rigs did back in '09, but WTF do I know about oil???

Thursday, February 5, 2015

EIA: Gas in Storage -115 to 2.428

The EIA reported this morning that working gas in storage was down 115 Bcf last week to 2.428 Tcf.  The withdrawal was 56% smaller than last year (-259 Bcf) and 30% below the five year average (-165 Bcf).  The current storage level is now 23.9% above last year (1.96 Tcf, a difference of 468 Bcf) and 1.2% below the five year average (2.457 Tcf, a difference of 29 Bcf).  With another lackluster withdrawal (the five year average withdrawal expected to be reported next week is around 178 Bcf), the current level will rise above the five year average.


Tuesday, February 3, 2015

The Sobering Reality of Natural Gas Prices

The Henry Hub natural gas spot price closed at $2.63/MMBtu yesterday.  Last year this week, the price spiked to $7.91 and averaged $6.34 for the week.  I'm not even going to do the math.

Monday, February 2, 2015

Haynesville Shale Rig Count Unchanged at 24

The Haynesville Shale rig count held at 24 last week, unchanged in Louisiana (15) and Texas (6).


Friday, January 30, 2015

U.S. Rig Count: -90 to 1,543 (But Gas Rigs up 3)

The Baker Hughes U.S. rig count continued its plummet this week, dropping 90 rigs to 1,543.  This is the lowest rig count since June 18, 2010 when the stats were actually flip-flopped and there were 574 oil rigs and 953 gas rigs because shale oil drilling was just taking off.

This week, oil rigs were down 94 to 1,223, gas rigs were up three to 319 and miscellaneous rigs were up one to one.  By type, horizontal rigs were down 61 to 1,168, vertical rigs were down 23 to 235 and directional rigs were down six to 140.  Among gas rigs, horizontal rigs were up five to 240, directional rigs were up one to 49 and vertical rigs were down three to 30.


Thursday, January 29, 2015

Snapshot of the Future: More Natgas Power Plants

Because of swooning natural gas (and oil) prices, the energy market is looking pretty sour right now, but that's not going to be the case forever, especially for natural gas.  SNL Financial recently featured the new Stonewall natural gas-fired power plant, a merchant plant being developed by Panda Power Funds, LP in Loudoun County, VA, an exurb of D.C. and one of the fastest growing counties in the U.S.  The plant will effectively replace the coal-fired Potomac River Generating Station that closed in 2012 and take advantage of natural gas from the Marcellus Shale to serve a growing population.

Stonewall is one of many instances across the country where new natural gas plants are replacing aging coal facilities.  In a few years, gas likely will displace coal as the predominant source of electric power in the country.  These changes will be gradual but steady and will be intertwined with the opening of a handful of LNG export facilities and new manufacturing complexes that will further strengthen the demand side of the natural gas equation.  The new demand drivers will not eliminate price volatility, but they likely will increase and diversify gas demand, which will help raise the "floor" price of natural gas.