Tuesday, January 12, 2010

Good Article on Common Resources

I read an interesting article in E&P Magazine on Common Resources, the private equity-backed E&P startup that has drilled some very good wells on the Texas side of the Haynesville Shale.  Because Common is still a private company, it is not obligated to make much information about itself known, so the best sources of data are often articles. 

The management team, led by Roger Jarvis, built Spinnaker Exploration Co. into a significant Gulf of Mexico E&P player and ultimately sold the company to Norsk Hydro for $2.5 billion.  Common Resources opened its doors in 2007 and is backed by private equity investors Pinebrook Road and EnCap to the tune of $500 million.  Common is focusing its efforts in the Haynesville region and the Eagle Ford Shale.

Common concentrates its efforts in an area in East Texas called the Shelby Trough, where the company leases land in the Bossierville Field in northern  San Augustine Co. and southern Shelby Co. Based on the company's web site, Common leases 68,338 gross acres (32,428 net), and its 2010 capital budget is $88 million, which should fund between 14 and 17 wells.  Recent wells in the area have produced initial production rates of 15-21 MMcf/day with estimated ultimate recoveries (EUR) of 8.5 to 10 Bcf.  A recent well, Red River 619 #1 produced 1 Bcf in the first 75 days, bringing lots of attention to the Shelby Trough area. 

Another source of excitement for Common is the Middle Bossier Shale, which lies above the Haynesville Shale.  The company believes that the geologic qualities of the Mid-Bossier in the area in which it leases are as good or better than those of the Haynesville Play. 

Over the next few years, I think Common will go public or be sold, both to raise additional equity funds for continued drilling and to provide liquidity for its financial sponsors.  Keep an eye on Common Resources to appear in the "deals" column in the next couple of years.

1 comment:

Anonymous said...

Good article also here: http://seekingalpha.com/article/182347-worlds-largest-producer-of-natural-gas-now-it-s-u-s