Thursday, May 14, 2009

Devon: Slow and Steady

When I read about Devon Energy's Haynesville Shale activities, I'm reminded of the moral of Aesop's fable The Tortoise and The Hare, "slow and steady wins the race." Devon is probably the largest Haynesville leaseholder with approximately 570,000 acres. Most of it, however, is held by production, so Devon is in no hurry to drill.

Devon has drilled five wells to date in the Carthage, TX area. Unfortunately the first two suffered casing failures and the next three were brought to production very conservatively to avoid similar problems. They still expect to recover between 5 and 8 Bcfe from these wells, but they have been slow starters. On the positive side, the company sees far slower decline rates in these first successful wells (although they didn't publish any curves). Devon plans another five wells in 2009. Well costs have dropped from the $11 million rage to the $9 million range.

Devon seems content to wait out the low natural gas prices and the technological learning curve.

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