Tuesday, August 10, 2010

Penn Virginia Headed for the Sidelines

Last week, Penn Virginia Corp. released its earnings and operational report.  The company discussed its five recent Haynesville wells, four of which already have been noted on this site.  The fifth well is the J&R Tiller #1H, status #689897, which flowed at a self-reported IP rate of 10.0 MMcf/day.

One of the company's completions, Fults #2H (#685603), which IP'd at 15.3 MMcf/day (reported to the TRRC at 14.85 MMcf/day) and had a 30 day flow rate of 11.2 MMcf/day, was completed with 24 frac stages (!).  Another well, the Brown #6H (#660706) was completed with 15 frac stages.  The well IP'd at 10.4 MMcf/day and saw an average flow rate of 7.4 MMcf/day for the first 30 days.  These were the first two wells PVA completed with more than ten frac stages.   After two months, both wells had exceeded production of PVA's previous wells by about 75%.

The above sounds like good news for PVA, but I guess it's not good enough in this current price environment.  The company announced that it has decided to "defer drilling in the Haynesville Shale for the remainder of the year to evaluate the longer-term production results and economics of these recent wells."  PVA will redirect the two wells it is running in east Texas to drill horizontal Cotton Valley wells.  Two recent CV wells IP'd at 4.9 and 3.0 MMcf/day, and the play offers natural gas liquids and oil content on top of regular old gas.

4 comments:

Anonymous said...

Wasn't this already in the CC?

Anonymous said...

I do not know if you look at the GoHaynesville web site there is a lot of chatter about Royality Payments. Can you look and give us your comments.

it seems like that Chesapeake is off a $1.00 on their payments compared to PetroHawk.

Thanks

Robert Hutchinson said...

I didn't find the discussion on GHS, but I can see firsthand that there are discrepancies in wellhead pricing. I think producers strive to keep statements as "black box" as possible, but just looking at wellhead prices between some HK and CHK statements, it seems there is a discrepancy, but by my calculations it is about 28 cents over the first five months of 2010, not $1.00.

I don't claim a lot of knowledge about the contents of the "black box" but I think the wellhead price might vary by location of the well. Neither HK nor CHK seem to have separate deductions for processing and transportation, so it is probably netted out. Those costs vary by producer and location.

Another thing, HK pays mid-month and CHK pays at the end of the month. I don't know if their month end is different, but by my cursory analysis, CHK's wellhead price is consistently lower than HK, so that probably doesn't explain it.

I'll look into it some more. What I found interesting in my cursory analysis was that HK's wellhead prices for Haynesville wells was lower than that for Cotton Valley wells. What's up with that? More processing costs with HA wells? Not sure.

Anonymous said...

Probaby lower BTU/mcf. Gas is typically sold on a MMBTU basis verses MCF.