Monday, March 1, 2010

El Paso: Quck Update

El Paso reported its earnings today.  One thing from the presentation jumped out at me.  In the "2009 Look Back" section of the company's presentation, the second bullet read, "Haynesville Became Anchor Program." 

Anchor Program - I like the sound of that. 

El Paso hasn't been a huge Haynesville producer to date, but it is doing about 110 MMcf/day, which represents about 15% of the company's total production and is the largest single source of production in the company.  EP has tapped some pretty good wells, almost exclusively in DeSoto Parish, LA, where it is finding its best results in the Holly Field. 

Unlike some other companies in the play, El Paso is not of the belief that choking back wells leads to better production.  On the company's conference call, management said, "We’re producing the wells that whatever rates we can deliver out of the fields."  We will have to see how that plays out over the long term because the choking-back group seems to be growing.  Hopefully in 6-8 months we'll have some better data to compare.

Looking forward for El Paso in the Haynesville Play, the company will maintain a five rig drilling program with a 2010 capital budget of $248 million (and that's on top of the $100 million the company will spend on Cotton Valley wells in the area).  EP will target 41 wells in 2010 including some in the Bossier Shale.

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