Tuesday, July 27, 2010

Questar Update

I never got around to discussing the fact that Questar spun out its E&P subsidiary, QEP Resources, in late spring.  The basic rationale is that the company wanted to separate its faster growing E&P business from its slower growing utility business in an effort to squeeze more value out of each.  You may recall that EnCana did the same a little while back, separating its natural gas-focused E&P (which kept the name EnCana) from its slower growing oil business (now named Cenovus).  I'm not good with new names (ask of my female friends who got married in the past ten years), so I'll probably still call the company Questar.

In any case, Questar reported its earnings today and provided a brief operational update.  First thing I noticed is some more acreage under Questar's control, with the company's net Haynesville acreage increasing from 46,000 six months ago to 49,000 today.  As of June 30, 2010, Questar is producing 178 MMcf/day in the Haynesville Shale.

Questar always seems to quietly chug away.  It is running seven operated rigs now and is using a restricted choke technique, a la Petrohawk, on its new wells to minimize pressure drawdown at the reservoir.  Using this technique, the company has experienced a relatively flat production profile for the first four to nine months before seeing a noticeable decline.  The trade-off is lower initial production rates. 

I like Questar because they company publishes its completed Haynesville wells before they show up in the state's database.  Here are recent completions from the May to July 2010 time frame:
  • M. Sanders 9-15-9 H #1, Questar: 10.5 MMcf/day IP; Alabama Bend Field, Bienville Parish, S9/T15/R9; res. A, serial #240457
  • Conly SR 27 H #1-ALT, Questar: 14.2 MMcf/day IP; Woodardville Field, Bienville Parish, S27/T15/R10; res. CV RB, serial #240174
  • Conly SR 34 H #1-ALT, Questar: 5.1 MMcf/day IP; Woodardville Field, Bienville Parish, S34/T15/R10; res. CV RB, serial #240262 (The well is producing at a restricted rate because there is coiled tubing stuck in the lateral.)
  • Caplis 30-16-12 H #1, Questar: 10.9 MMcf/day IP; Elm Grove Field, Caddo Parish, S30/T16/R12; res. A, serial #240463
  • Caplis 4 H #1, Questar: 11.5 MMcf/day IP; Elm Grove Field, Caddo Parish, S30/T16/R12; res. non-unitized, serial #240534
  • Nettles 13-15-10 H #1, Questar: 11.9 MMcf/day IP, on ?/64 in. choke, at ? psi; Woodardville Field, Bienville Parish, S13/T15/R10; res. A, serial #240639
  • J. Caplis 5-15-12 H #1, Questar: 11.2 MMcf/day IP, on ?/64 in. choke, at ? psi; Elm Grove Field, Caddo Parish, S30/T16/R12; res. A, serial #240350
  • Bienville S&G 11 H #1, Questar: 11.3 MMcf/day IP, on ?/64 in. choke, at ? psi; Alabama Bend Field, Bienville Parish, S11/T15/R10; res. non-unitized, serial #240615
  • Sustainable Forest 23 H #1, Questar: 12.4 MMcf/day IP, on ?/64 in. choke, at ? psi; Alabama Bend Field, Bienville Parish, S23/T15/R10; res. non-unitized, serial #240064
  • Bienville S&G 35-15-9 H #1, Questar: 10.5 MMcf/day IP, on ?/64 in. choke, at ? psi; Alabama Bend Field, Bienville Parish, S35/T15/R9; res. A, serial #240595
  • Bienville S&G 29-15-9 H #1, Questar: 10 MMcf/day IP, on ?/64 in. choke, at ? psi; Woodardville Field, Bienville Parish, S35/T15/R9; res. A, serial #240593
(These completions will be added to the spreadsheet and maps on Thursday.)

Questar reported that is is currently drilling seven operated wells and has 11 operated wells awaiting completion.  The company participated in 15 non-operated wells that were turned to sales in the second quarter and has an interest in two wells that are being drilled and 11 more wells that are awaiting completion.

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