Tuesday, March 9, 2010

Callon Petroleum: Update

I listened to the Callon Petroleum conference call to get an update on the company's efforts in the Haynesville Shale.  Recall that Callon, which had concentrated its business in the Gulf of Mexico, changed its strategy in 2009 to refocus on terrestrial activities in the Permian Basin and the Haynesville Shale. 

Callon leases 404 net acres (70% of 577 gross acres) in Bossier Parish.  The company hasn't filed for any permits, but eyeballing the map below, it looks like the acreage is in Sec. 1, Township 16, Range 11 (let me know if I'm wrong - unfortunately, the big picture map and the blow-up don't really match, so it's hard to tell).  No Haynesville units have been formed for this section to date. 

Callon's acreage should host seven wells, and the company has contracted a rig to start drilling two wells before the end of the year (Callon will be the operator).  The rig has two wells to drill for other companies before it gets to Callon, so don't expect Callon's first well to spud before summer.  The company expects to have both wells completed and producing in the fourth quarter.  Callon's current plans are to complete two wells per year on this acreage for the next three years.

In terms of economics, Callon estimates well costs of $9.0 million and estimated ultimate recoveries (EUR) of 6.4 bcfe per well.

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