Tuesday, November 3, 2009

Southwestern Energy Update

Southwestern Energy reported earnings this week and discussed its promising Haynesville Shale completions in Texas. SWN is in a 50-50 joint venture with a private company that it declines to name in its company materials, but I believe that it is Common Resources, LLC, which is listed as the operator of several of the completions noted below. SWN has approximately 32,800 net acres in the Haynesville/Bossier Shale, most of which is in northern San Augustine and southern Shelby counties. The company noted the following completions, some of which are not very current:
  • Red River 877 #1: 7.2 MMcf/day IP, Shelby Co. (Q1, 2009) (previously reported)
  • Red River 164 #1: 13.4 MMcf/day IP, San Augustine Co. (Q2, 2009) (previously reported)
  • Red River 619 #1: 16.7 MMcf/day IP, San Augustine Co. (Q3, 2009)
Three more wells are in process: Burrows Gas Unit #1, undergoing testing; Red River 257 #1, awaiting completion; Red River 257 #2, drilling. The company plans to drill one more well in 2009. The Red River 257 #2 is targeting the Mid-Bossier Shale, which should provide another much needed data point to understand the potential of that formation.

In the company's conference call, management suggested that the higher IP rates it has seen in places might be the result of a higher carbonate ratio in the formation that makes the stone more brittle and prone to fracturing versus other places in Texas.

Southwestern is currently producing 34.7 MMcf/day gross, which equates to 10.2 MMcf/day net. The map below, while somewhat dated, shows the general area of SWN’s activity.

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