Tuesday, August 31, 2010

Reliance Industries Enters Third U.S. Shale JV

This news is about three weeks old, but in the fog of the arrival of a new baby, I neglected to note that India's Reliance Industries agreed to a joint venture deal with Texas-based Carrizo Oil and Gas for its Marcellus Shale acreage.  I had previously cited speculation in Indian newspapers that Reliance was looking at Quicksilver Resources, but that obviously didn't happen.

Under the terms of the deal, Reliance will pay $392 million for 60% of the JV that will control Carrizo's 62,600 acres in central and northeast Pennsylvania.  The price implies a valuation of $6,258 per acre, which is considerably less some other recent international JVs in the Marcellus Shale, including Reliance's $14,167 per acre deal for a JV with Atlas Energy and Mitsui's $11,100 per acre for a JV with Anadarko.

This is the third U.S. shale gas deal in the course of a few months for Reliance.  The company's international E&P company is now being headed by Walter Van de Vijver, who is the former CEO of Royal Dutch Shell.  Speculation is that Reliance is using the joint ventures as a learning mechanism with the intent of bringing shale extraction techniques back to India in expectation of the Indian government leasing land prospective for shale gas in the next year.

Petrohawk: Trying to Pick Up the Stock

Two things came out of the recent presentation Petrohawk gave at Enercom 2010 Oil & Gas Conference:  1) the company's willingness to move away from gas production if commodity prices remain low and 2) more data on its restricted choke program. The goal of both of these discussions, in my opinion, is to boost the company's flagging stock price, which continues to sag versus the other big Haynesville players.


While Petrohawk was an early entrant in the "liquidy" Eagle Ford Shale, the company is still regarded as "gassy."  Petrohawk made it clear to investors, however, that it is prepared to lay down rigs if gas prices remain low over the next two years.  As management said, "HK has considerable flexibility post-primary lease capture phase in the Haynesville Shale."  To reinforce this statement, the company offered its flexible strategy based on certain gas commodity prices:

Cubic's Thomas 36 #1 Completion

Cubic Energy reported the completion of the Thomas 36 #1 well, in which it has a 37% working interest.  The well is operated by Exco Resources:

  • Thomas 36 #1, EXCO Production:15.0 MMcf/day IP at 7,000 psi; Johnson Branch Field, Caddo Parish, S36/T16/R15; res. A, serial #241196

EOG Update

Below are some thoughts from a recent EOG Resources earnings release and presentation.  I've gotten a bit behind from a news perspective, so in the spirit of catching up, please excuse any on old news.

First, the company reported the below completions that I have not yet posted:
  • Sustainable Forest 5 #6-ALT, EOG Resources:  19.3 MMcf/day IP; Ten Mile Bayou Field, DeSoto Parish, LA, S5/T11/R12; res. A, serial #240632 (self-reported by EOG)
  • Walters Gas Unit #1H, Cabot Oil & Gas:  21. MMcf/day IP; Carthage Field (Haynesville Shale), San Augustine Co., TX (self-reported by EOG)

Sunday, August 29, 2010

Lots of New Louisiana Completions

I will update the spreadsheet and maps on Wednesday/Thursday after the official DNR release.
  • Lambert 20-16-14 H #1, Chesapeake Operating: 19.272 MMcf/day IP, on 22/64 in. choke, at ? psi; Metcalf Field, Caddo Parish, S20/T16/R14; res. A, serial #240225
  • Sandford 16-16-14 H #1, Chesapeake Operating: 15.207 MMcf/day IP, on 22/64 in. choke, at 5,977 psi; Caspiana Field, Caddo Parish, S16/T16/R14; res. A, serial #240069
  • Taylor-Potter 8-16-14 H #1, Chesapeake Operating: 13.44 MMcf/day IP, on 22/64 in. choke, at 6,482 psi; Metcalf Field, Caddo Parish, S8/T16/R14; res. A, serial #240573
  • Western D 19-15-15 H #1, Chesapeake Operating: 15.642 MMcf/day IP, on 22/64 in. choke, at ? psi; Bethany Longstreet Field, Caddo Parish, S19/T15/R15; res. A, serial #240549

Texas Developmental Activity

There were no new Texas completions, but there is some decent developmental activity:
  • George Robertson #3, Valence Operating; Carthage Field (Haynesville Shale), Harrison Co. (vertical)
  • George Robertson #4, Valence Operating; Carthage Field (Haynesville Shale), Harrison Co. (vertical)
  • Harris-Munden GU #11 H, NFR Energy; Carthage Field (Haynesville Shale), Harrison Co.
  • Kurth Investments Unit #1 H, EOG Resources; Carthage Field (Haynesville Shale), Nacogdoches Co.
  • Bengal #1 H, Crimson Exploration; Carthage Field (Haynesville Shale), Sabine Co.
  • Wood SU #1 H, Exco Operating; Carthage Field (Haynesville Shale), San Augustine Co.
  • Holloway SU #1 H, Exco Operating; Carthage Field (Haynesville Shale), San Augustine Co.
  • Stedham SU #1 H, Exco Operating; Carthage Field (Haynesville Shale), San Augustine Co.
  • E. Crest #1, Southwestern Energy; Carthage Field (Haynesville Shale), Shelby Co. (directional)
  • Wiggins Unit #1 H, Noble Energy; Carthage Field (Haynesville Shale), Shelby Co.

Friday, August 27, 2010

Haynesville Shale Rig Count: +2 to 179

The Haynesville Shale rig count increased by two to 179 this week, a relatively quiet one for rig changes.  The net two rig increase was entirely in Texas, which currently has 48 rigs working.  The Louisiana Haynesville rig count held at 131.  The maps and spreadsheets have been updated.


U.S. Rig Count: +5 to 1,656

The weekly Baker Hughes rig count showed a five rig increase nationally to 1,656.  This is the twelfth straight week of increased rigs since the deep water drilling moratorium.  The net increase was entirely in oil rigs, with 17 new oil rigs ans 12 fewer gas rigs.  By type, there were nine new horizontal rigs, eight new directional rids and 12 fewer vertical rigs.

In the Haynesville Shale area, inclusive of other formations, the rig count was up by five.  In north Louisiana, the count was up one to 137, while in east Texas the count was up four to 68.

Thursday, August 26, 2010

A "Clean Coal" Ad on MY Site?!?

I was shocked moments ago when I checked my recently posted comments on natural gas prices and storage to see an advertisement on the haynesvilleplay.com site with a headline, "Our Future of Clean Coal."

WTF?!?!?

It is an ad placed by americaspower.org, a nice sounding lobbying group  for the coal industry.  The site shows sympathetic images of people who work in the coal industry with their families and in other cozy settings.  One quote, "I'm essentially an environmentalist working for a coal mine."  Essentially???  It reminds me of attorneys who call themselves "environmental lawyers" but who represent reprehensible polluters.

I know there is a certain amount of chance when companies place ads with large aggregators, but I can't imagine a less friendly audience (or at least a less friendly author).  I guess I've written negatively about coal a few times recently, including the boondoggle of FutureGen 2.0, so it might pop up as an option, but nobody is as surprised as me to see an ad touting the fantasy of "clean coal" on my site.

EIA: Storage +40 Bcf to 3.052 Tcf

The weekly EIA working gas in storage report showed a 40 Bcf net injection, bringing the total gas in storage to 3.052 Tcf.   The weekly injection again was lower than the same week last year (+53 Bcf) and the five year average (+59 Bcf).  Storage levels actually decreased by a small amount in the Producing and West Regions, while increasing by 48 Bcf in the East Region.

The storage level continues to improve when compared against last year (198 Bcf, or 6.1% lower) and the five year average (177 Bcf, or 6.2% higher).


Temperatures across most of the country again remained high last week when compared against normal readings, as shown below.

Wednesday, August 25, 2010

Goodrich Not Sold on Restricted Choke

In a recent presentation, Goodrich Petroleum said that the company has looked at restricting choke sizes on its Haynesville wells to improve ultimate recovery.  While the company sees some benefits to the technique, it will not apply the technique widely across all of its completions.  Specifically, the company will not restrict chokes on higher initial production wells.  The company feels that the time it takes to recapture lost production from lower IP rates is close to two years and is not worth the loss in present value cash flow.

Management stated plainly that it is less interested in EURs than it is in rate of return and cash flow.  This is a choice each producer must make and the decision is especially important in times of low commodity prices like these.  I view this as  short-sighted.  It benefits the company in the short run because Goodrich can maximize it production to pay its bills.  But the company (and land owner) might be harmed in the long run if the ultimate productivity of the well is compromised by short-term decisions.  I don't mean to slam Goodrich, but the company is heavily natural gas dependent and has to make decisions in the best interest of the company's survival.

Gas Electricity Plant to Replace Planned Coal Plant in Ohio

American  Municipal Power, Inc. (AMP) announced earlier this week that it is moving forward with a 600 MW natural gas combined cycle power plant on the Ohio River in Megis Co., Ohio.  If approved by a multitude of oversight bodies, it would be built on the site originally planned for a 1,000 MW coal-fired power plant.  Apparently this new proposal is more palatable to environmental groups, one of which has already withdrawn its objections, and the members of the cooperative utility,which would save money over the long haul.

While this is but one example of utility investment decisions being made all over the country, this particular decision reflects the complex environment for utilities.  Not only is it a matter of how much a plant costs to build and operate, utilities must think about whether building a coal plant will expose them to future environmental restrictions that attempt to quantify the coal's environmental and human health damage. They must also look at the new paradigm of natural gas supply.  Shale gas discoveries have erased the supply concerns that have long made natural gas prices so volatile.

Two New Middle Bossier Completions

In reading through a few presentations from the EnerCom Oil & Gas conference, I noted a couple of new Middle Bossier Completions.  Interestingly, neither was reported by the operator, so I can't fully vouch for them.

  • Harlon Blackmon 25 #2, SWEPI, LP: 23.6 MMcf/day, unknown choke and pressure; DeSoto Parish, Trenton Field, S 25/T 11/R13; classified as Jurassic reservoir A, serial #240601 (in its presentation, Petrohawk referred to the well as Blackmon 26 #1, but that well doesn't seem to exist - I think this is the correct one)
  • Hazel Byrne Gas Unit 3 #1H, Berry Oil: 9.654 MMcf/day,  unknown choke and pressure; Harrison Co., Carthage Field; status #689135 
GMX Resources reported that it considers the Hazel Byrne well  a Mid-Bossier completion  based on TRRC filings.  The completion was previously reported on this site a few weeks ago, so I'm reclassifying it.  GMX is pretty excited about the prospects of this well being a Mid-Bossier because it is something of an outlier compared to existing MBS penetrations, being the only MBS well in Harrison Co., TX (see Mid-Bossier map towards the bottom of the map page).  If it indeed is a Mid-Bossier completion, it implies good things for GMX's acreage at a time when low natural gas prices is causing the Harrison County area to be  less attractive to investors.  

    Monday, August 23, 2010

    Recent Texas Completions

    Completions:
    • Carolyn Bell Deep GU #1H, NFR Energy :  8.804 MMcf/day IP, 22/64" choke; Carthage Field (Haynesville Shale), Harrison Co.
    • Wiener #1H, Chesapeake Operating:  11.533 MMcf/day IP, 20/64" choke; Carthage Field (Haynesville Shale), Panola Co.
    • Markey Gas Unit #1H, Devon Energy:  2.364 MMcf/day IP, Adj./64" choke; North Carthage Field (Bossier Shale), Panola Co.
    • McRae Hay GU #5H, Goodrich Petroleum:  5.208 MMcf/day IP, 18/64" choke; Carthage Field (Haynesville Shale), Rusk Co.
    • Falvey Gas Unit #1, Unit Petroleum:  0.299 MMcf/day IP, 32/64" choke; Carthage Field (Haynesville Shale), Gregg Co. (directional)

    Saturday, August 21, 2010

    Haynesville Rig Count: -3 to 177

    The weekly Haynesville Shale rig count decreased by three to 177.  In Texas, the count dropped by four to 46, and in Louisiana, the count increased by one to 131.


    Friday, August 20, 2010

    Deal or No Deal?

    I read today in the Wall Street Journal that three separate privately owned shale-focused companies up are for sale at the same time.  Chief Oil & Gas, a player in the Marcellus Shale, Talon Oil & Gas, a private equity based company formed in 2007 with mostly Texas acreage, and Anschutz Exploration, which has interests in the Marcellus and Bakken Shales, among other assets, are all seeking buyers, according to WSJ sources. (also in Forbes)

    Tho themes run through these potential transactions.  First, size. It is becoming clear that for producers to successfully maintain a shale drilling program the companies need to be of substantial size and have good access to the capital markets, both for debt and equity.  The history of the domestic natural gas industry is that small scrappy companies developed finds and larger ones came in behind, either buying acreage or further validating the play.  It appears that there is little room left at the shale table for the little guys (not that any of the above mentioned companies are "little guys").

    U.S. Rig Count: +11 to 1,651

    The weekly Baker Hughes U.S. rig count continues to show new rigs deployed, this week increasing by 11 to 1,651.  The big increase was in oil rigs (+19), while gas rigs dipped (-7) and directional rigs dropped by one.  By type, horizontal rigs increased by ten and vertical rigs increased by six, while directional rigs dropped by five.

    In the Haynesville Shale area, inclusive of other formations, the rig count decreased by six to 200.  North Louisiana held steady at 136, while east Texas dropped by six to 64.  The 64 rig figure in east Texas is the lowest level of working rigs in the area since January 22, 2010.  This week also marks the first time this year that  the north Louisiana rig count is lower than it was six months ago. The total  number of rigs working in E TX and N LA peaked on April 30 at 221.  The N LA rig count is a better proxy of Haynesville activity because +/-95% of the rigs working in the area target the Haynesville Shale compared to 50-65% for E TX.

    Does this indicate a plateauing of the Haynesville area rig count, a temporary time out or the beginning of a longer decline?  

    I'll have the detailed Haynesville rig count and map by late afternoon or tomorrow.

    Thursday, August 19, 2010

    EIA: Storage +27 Bcf to 3.012 Tcf

    The weekly EIA working gas in storage report showed a 27 Bcf net injection, bringing the level of gas in storage to 3.012 Tcf.  The net injection was 50% lower than last year's injection (+54 Bcf) and 46% lower than the five year average (+50 Bcf).  The current storage level is 5.8% lower than last year's figure this week (-185 Bcf) and 7.0% higher than the five year average (+196 Bcf).  We've seen improvements in the storage situation for the past couple of months and it is finally starting to show up graphically on the famous band graph:


    A couple of interesting notes.  First, the current storage level in the East Region, the biggest of the three regions, is now only 1.0% higher than the five year average.  Second, the Producing Region, the second largest region, showed a 16 Bcf net withdrawal, which is not unheard of but is not altogether common this time of year.  As the graphic below shows, the warm weather certainly contributed to the low net injection.

    Wednesday, August 18, 2010

    Two New Louisiana Completions


    • Womack 11 #3, J-W Operating:  18 MMcf/day IP, on 22/64 in. choke, at 5,200 psi; Elm Grove Field, Bossier Parish, S11/T16/R11; res. A, serial #239632

    • Lee 20 #4-ALT, EXCO Production:  12.776 MMcf/day IP, on 20/64 in. choke, at 7,484 psi; Caspiana  Field, DeSoto Parish, S20/T14/R12; res. A, serial #240867

    Crimson Exploration and Mid-Bossier Update

    Today, Crimson Exploration announced the completion of its Grizzly #1 Middle Bossier Shale well in San Augustine Co. TX in the company's Bruin prospect.  The well, which is still undergoing some cleanup, IP'd at 11.5 MMcf/day on a 16/64" choke at 9,100 psi.  Given the restricted choke, Crimson is very pleased with the well's result, stating that the well "has validated the reserve potential of the Mid Bossier Shale in its Bruin Prospect Area."

    Crimson also touted the fact that the well was completed using a restricted choke technique, a practice that the company described as "industry-best practices for reservoir optimization to maximize ultimate recovery."  Crimson is on board with the restricted choke technique based on the results of other operators.  Production charts from the first two weeks of the Grizzly well ("Graph 1" below), indicate a higher pressures and steadier flow rates.  But of course, two weeks of data does not validate the process.  Still, it is encouraging.

    Tuesday, August 17, 2010

    Boondoggle 2.0

    "Clean coal" is back again.  This time in the form of the Department of Energy's approval of $1 billion for a "clean coal" power plant in Mattoon, IL under the guise of FutureGen 2.0.  The grant is part of $3.4 billion of stimulus money targeted at "clean coal."  Given the tenacity of the coal lobby, all of that stimulus money might  actually get spent.

    The plant is touted as "the world's first, commercial-scale, oxy-combustion power plant" and carbon dioxide storage network.  The phrase "commercial-scale" is key since it is an unproven technology at any large scale.  The project will repower a 200 megawatt coal plant in Meredosia, IL owned by Ameren Energy Resources.  It will be the successor to the FutureGen project that was approved by President George W. Bush in 2003 that was later canceled in 2008 for cost overruns and a lack of tangible progress.

    Many folks will call it pork barrel politics.  There is probably some truth to that - it is politics after all - but I think that criticism misses the target.  The bigger issue is pouring a billion dollars down the rabbit hole that is "clean coal."

    Monday, August 16, 2010

    Dynegy and Irony

    In an interesting transaction, private equity company Blackstone acquired Houston-based power generator Dynegy in a deal worth about $4.7 billion.  In truth, Blackstone acquired Dynegy for nothing and will get a bank account seeded with an additional $800 million for its trouble.  Here's how:  Blackstone agreed to pay $543 million for the stock of Dynegy while simultaneously selling four of the company's natural gas power plants to NRG Energy for $1.36 billion.  Blackstone assumed Dynegy's $4+ billion of debt, but that's not an upfront expense since there were no change of control provisions.  I wonder how soon after closing we will hear about a big dividend paid to Dynegy's new shareholders.

    It's a really interesting deal for a lot of reasons.  Dynegy, which started life in 1984 as a natural gas trading company called the Natural Gas Clearinghouse and then got into pipelines, trading and power generation, will become a company increasingly dependent on coal.  The company will be selling natural gas facilities in Casco Bay, ME; Moss Landing, CA; Morro Bay, CA; and Oakland, CA, thus increasing its exposure to coal from 26% to 37% (see map below). The new Dynegy will be much less focused on natural gas and will have a footprint dominated by the upper Midwest.



    New Texas Completions

    Completions:

    • James + Robert Tiller #1H, Penn Virginia Resources:  9.867 MMcf/day IP, 24/64" choke; North Carthage Field (Bossier Shale), Harrison Co. (self-reported last week by PVA at 10.0 MMcf/day)
    • Youngblood #1H, Chesapeake Operating:  5.24 MMcf/day IP, 22/64" choke; Carthage Field (Haynesville Shale), Harrison Co.
    • Jenk-Hazb GU #1H, Berry Oil:  9.723 MMcf/day IP, 18/64" choke; Carthage Field (Haynesville Shale), Harrison Co.
    • Werner #1H, Chesapeake Operating:  11.151 MMcf/day IP, 20/64" choke; Carthage Field (Haynesville Shale), Panola Co.
    • Watson GU #5H, BP America:  5.585 MMcf/day IP, adjustable choke; Carthage Field (Haynesville Shale), Rusk Co.
    • Smith #1H, Chesapeake Operating:  3.615 MMcf/day IP, 14/64" choke; Carthage Field (Haynesville Shale), Shelby Co.
    • Billy Harris Hay #1H: Previously self-reported by Goodrich Petroleum at 11.698 MMcf/day at 24/64" choke; reported by TRRC at 5.817 MMcf/day at 18/64" choke

    Developmental Activity:

    • SWEPCO Deep GU #1 H, NFR Energy; Carthage Field (Haynesville Shale), Harrison Co.
    • Hill Gas Unit #7 H, EOG Resources; Carthage Field (Haynesville Shale), Nacogdoches Co.
    • McKinney Gas Unit #1 H, EOG Resources; Carthage Field (Haynesville Shale), San Augustine Co.
    • Crest D GU #1, Southwestern Energy; Carthage Field (Haynesville Shale), Shelby Co.
    • Crest F GU #1, Southwestern Energy; Carthage Field (Haynesville Shale), Shelby Co.
    • KC GU #1 H, Chesapeake Operating; Carthage Field (Haynesville Shale), Shelby Co.

    Friday, August 13, 2010

    Haynesville Rig Count: -3 to 180

    The weekly Haynesville Shale rig count showed a three rig decrease to 180.  Texas saw two new working rigs, while Louisiana saw a decrease of five.  The spreadsheets and maps have been uploaded and are available under the appropriate tabs.


    U.S. Rig Count: +35 to 1,640

    The weekly Baker Hughes rig count showed a 35 rig increase this week in the U.S., bringing the total number of working rigs to 1,640.  The big increase was in oil rigs, which jumped 25 to 636.  Gas rigs increased as well, up nine to 992.  Directional rigs were up one to 12.  By type, vertical rigs were up 27, horizontal rigs were up seven and directional rigs were up one.

    In the Haynesville region, inclusive of other formations, the rig count dropped by five to 206, with the entire decrease coming in north Louisiana.

    A detailed Haynesville Shale rig count will be published late today or tomorrow.

    Thursday, August 12, 2010

    August LA Lease Sale: Average North LA Bonus $5,734

    The monthly lease auction by the Louisiana Mineral Board had a number of north Louisiana parcels prospective for the Haynesville Shale.  Because the sale featured many parcels that were outside the established hot drilling areas, often on land where there are no Haynesville units,  the bonuses weren't terribly large.  The average lease bonus for the auction of these properties was $5,734, but the weighted average (based on acreage) was $3,623, as shown on the table below.

    A Bumper Crop of Louisana Completions

    • Rogers 28-16-15 H #1, Chesapeake Operating: 13.008 MMcf/day IP, on 22/64 in. choke, at 7,213 psi; Johnson Branch Field, Caddo Parish, S28/T16/R15; res. A, serial #240469
    • Anthony Forest Products 36 H #1, Chesapeake Operating: 7.685 MMcf/day IP, on 16/64 in. choke, at 7,016 psi; Johnson Branch Field, Caddo Parish, S36/T16/R16; res. non-unitized, serial #239686
    • E+L Development Inc. #1, Matador Production: 0.05 MMcf/day IP, on 15/64 in. choke, at 680 psi; Caddo Pine Island Field, Caddo Parish, S15/T19/R15; res. non-unitized, serial #237178
    • BSMC LA 2 HZ #1, Comstock Oil & Gas: 5.063 MMcf/day IP, on 22/64 in. choke, at 4,601 psi; Benson Field, DeSoto Parish, S11/T10/R15; res. non-unitized, serial #240608
    • Blackstone 18 H #1, SWEPI, LP: 19.792 MMcf/day IP, on 24/64 in. choke, at 7,891 psi; Trenton Field, DeSoto Parish, S18/T11/R12; res. Jur-A, serial #240554

    EIA: Storage: +37 Bcf to 2.985 Tcf

    Yet again the weekly EIA working gas in storage report showed a smaller build in natural gas storage than recent historical indicators.  This week, the net injection was 37 Bcf, bringing the total to 2.985 Tcf.  The net injection for this week was well below last year's (+63 Bcf) and just slightly below the five year average (+39 Bcf).  The current storage levels are now 5% below last year's record pace and 7.9% above the five year average.

    Tuesday, August 10, 2010

    Matt Simmons, Rest in Peace

    Famed energy investment banker Matthew Simmons, founder of Simmons & Co. International, died unexpectedly Monday in Maine at the age of 67.  Mr. Simmons forever will be associated with the peak oil movement, especially because of his book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

    I did not know the man, but I worked with his company on several occasions.  In fact, as I type I am looking past my monitor at an acrylic "tombstone" from a recent Simmons & Co. deal.  I have great respect for his important legacy.

    His death is untimely for many reasons, not the least of which are his recent controversial comments on the BP oil spill, which he contended  was significantly bigger that anyone believed, and his disparaging remarks about shale gas, which he more or less dismissed.  Both of these positions attracted a fair amount of criticism.  Mr. Simmons  was a man who was fearless in expressing his opinions, and I am sorry that he did not have the opportunity to continue to pursue his lines of reasoning on each of these positions.  I hope he is remembered for his larger body of work rather than his recent controversial remarks.

    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.

    Monday, August 9, 2010

    Mid-Bossier Shale Data Updated

    I updated the Mid-Bossier spreadsheet and map with a few new additions:

    • Added the Crimson Gobi well based on information from a company press release on 8/5/10
    • Updated  initial production information for Devon's J. Sublett well in San Augustine Co. TX
    • Added EOG Resources' Red River 5 #3 well in DeSoto Parish, which was self-reported as 15 MMcf/day IP in a company press release on 8/5/10
    • Added Goodrich Petroleum's R. Dean Hay (SL) GU 2H well in Shelby Co. TX based on a Goodrich press release from 8/4/10
    • Added Exco's Branch Ranch 31 completion 
    • Replaced Forest Oil's Black Stone Minerals 26 H #1 for #2 in Sabine Parish, LA.  A reader pointed out that the original entry was an expired permit.

    Lots of New Texas Completions

    Completions:

    • Timmins Gas Unit #3 HR, Penn Virgina Corp.:  8.975 MMcf/day IP, 28/64" choke; North Carthage Field (Bossier Shale), Harrison Co.
    • Fults Gas Unit #2 H, Penn Virgina Corp.:  14.85 MMcf/day IP, 28/64" choke; Carthage Field (Haynesville Shale), Harrison Co.
    • Baldwin #14 H, GMX Resources:  7.552 MMcf/day IP, 28/64" choke; North Carthage Field (Bossier Shale), Harrison Co.
    • Verhalen E #1 H, GMX Resources:  6.429 MMcf/day IP, 16/64" choke; North Carthage Field (Bossier Shale), Harrison Co.
    • Bell #5 H, GMX Resources:  6.459 MMcf/day IP, 13/64" choke; North Carthage Field (Bossier Shale), Harrison Co.

    Sunday, August 8, 2010

    Haynesville Rig Count: -1 to 183

    The Haynesville Shale rig count dropped by one this week to 183, with one rig falling off in Louisiana this week.



    Friday, August 6, 2010

    U.S. Rig Count: +19 to 1,605

    The weekly Baker Hughes rig count showed a robust 19 rig increase to 1,605 nationwide.  Gas rigs increased by 11 to 983, while oil rigs increased eight to 611.  The biggest increase was in horizontal rigs with 25 new rigs working.  Vertical rigs dropped by seven and directional rigs increased by one.

    In the Haynesville region, inclusive of other formations, the rig count dropped by four to 211, decreasing by two in both north Louisiana and east Texas.

    Busy afternoon. Detailed Haynesville count will be delayed somewhat.

    A Cautionary Tale

    I have long been struck by the loss of Louisiana's precious wetlands.  It is a story that is getting a great deal of attention in the national press with the BP oil spill disaster, but the seeds for the real disaster were sewn several generations ago.  This week, New Orleans Times Picayune outdoors writer Bob Marshall penned a four-part series on the decline of Delacroix Island, which lies southeast of New Orleans in St. Bernard Parish.  Once a self-sufficient and thriving town that lived off the bounty of the land, Delacroix is now a withering strip of land staring down its own demise.

    I urge you to read Bob Marshall's series on Delacroix Island. It is beautifully written and striking in its impact.  Bob Marshall is a true conservationist, as those who truly appreciate the bounty that nature provides, especially through fishing and hunting, should be. Here is a link to the stories while they still are posted:

    While south Louisiana is a little off topic for a Haynesville-centric web site, the lesson is important and it applies to the whole domestic natural gas industry and all of its stakeholders.  Louisiana wetlands were  irreparably damaged by oil and gas development.  There were other contributing causes, such as building levees and dams along the length of the Mississippi River, but nothing else hastened the damage to the wetlands like oil and gas drilling.  We as a state put short-term gain ahead of long-term impacts. We have never held the energy companies accountable for the environmental damage and still don't in any meaningful way to this day.

    Thursday, August 5, 2010

    One New LA Completion

    There was only one new completion announced this week by the LA DNR.  There were a bunch on the list, but they had been reported here over the past two weeks.  The spreadsheet has been updated as have the maps.  Here is the new completion:
    • RSD LLC 4 H #1, SWEPI, LP:  17.863 MMcf/day IP, on 24/64 in. choke, at 9,282 psi; Grogan Field, Sabine Parish, S4/T9/R11; res. Jur-A, serial #239985

    EIA: Storage +29 Bcf to 2.948 Tcf

    The weekly EIA storage report showed a second straight week of a 29 Bcf net injection into storage, bringing the total to 2.948 Tcf.  This net injection is considerably lower than last year's (+67 Bcf) and the five year average (+47).  The current storage levels are now 4.3% (-132 Bcf) below last year's (record high) levels and 8.1% (+221 Bcf) above the five year average.  The disparity between current levels and the five year average continues to narrow.  It's nice to see the red line come off the ceiling in the chart below.

    Wednesday, August 4, 2010

    EXCO Update

    Exco Resources reported its second quarter earnings earlier this week and gave an update on its Haynesville and Middle-Bossier Shale operations.  Exco is currently producing in excess of 500 MMcf/day from its Haynesville acreage, which represents  80% of the company's current production.  Obviously, the Haynesville/Mid-Bossier Shale  is an all-consuming project for the company.

    The company leases 182,000 net acres in the region, 80,000 net acres of which are prospective for the Haynesville Shale (the company is in a 50-50 joint venture with BG Group, which also has 80,000 net acres).

    Exco went out of its way in its discussion of results to note that because of depressed commodity prices it would be focusing on its higher returning locations in DeSoto Parish (Holly Field) and the Shelby Trough region of Texas.  It will also target areas where the company is subject to lease expiration.  As a result, Exco will defer drilling in  northern Caddo Parish, LA and Harrison Co., TX for now.  Exco says that half of its acreage is held by production.  I'm not sure where the non-HBP acreage is located outside of the focus areas,  so it will be interesting to if the company does much drilling outside of the blue circles below.



    Tuesday, August 3, 2010

    Petrohawk Update

    Petrohawk Energy's second quarter earnings and operations report was relatively uneventful as it concerned the Haynesville Shale.  The company's discussion mainly centered on operational improvements to save the company money and improve ultimate gas recoveries.

    First, as noted in a previous post, the company will try a modified wellbore design to do the fracture stimulation pumping at 10,000 psi versus the typical 15,000 psi.  This is important because there are only a few pressure pumpers that provide services at the higher pressures. They are in high demand and charge accordingly.  The 10,000 psi level is more typical for the region and there are many more contractors that can provide this service.  The end result if this test is successful should be a fairly significant decrease in completion costs (Petrohawk estimates this to be $1 million per completion).

    Chesapeake: We're True Believers, But We Are Also Pragmatists

    Chesapeake Energy, "America's Champion of Natural Gas" made it clear to investment analysts in its second quarter earnings and operations report that is also loves liquids.  (The company used the word "liquid" 47 times in its press release, versus 55 times for "natural gas.")

    The company announced that by year end 2015 it expects 25% of the company's production to be in liquids.  To achieve this shift, Chesapeake is going to allocate an increasing amount of capital expenditures to liquids rich plays. In 2009, the company spent 90% of its capex funds in natural gas plays, versus 10% for liquids plays.  The company's projected 2012 capital budget will shift that ratio to 45% gas/55% liquids.  Chesapeake stated that its total capital budget for 2011 will not change much from 2010, except the gas play budget will shrink by $400 million and the liquid plays budget will increase by that same amount.

    Quite a change America's Champion of Natural Gas.

    Monday, August 2, 2010

    CNG in LA

    The city of Lafayette, Louisiana has followed Shreveport/Bossier City by deciding to implement  a fleet of compressed natural gas (CNG) municipal vehicles. What swayed Lafayette? Improved air quality, lower fuel costs, the potential for governmental funding and the abundance of gas from the Haynesville Shale.

    The article linked above has a pretty good update of the status of the CNG movement in Louisiana. One item of note is a step by Apache Corporation to help address the chicken and egg problem of building CNG stations when there are few CNG customers. The company will take the plunge and install a CNG fueling station in Lafayette by early 2011. It's the first step in a long process.

    Good Op/Ed Piece in Washington Post

    Washington Post columnist Robert J. Samuelson wrote a good column in today's Washington Post about shale gas. It was a good overview with nothing particularly new, but Samuelson is an independent voice speaking objectively about the merits of shale gas.  The message continues to trickle in...

    Sunday, August 1, 2010

    New Louisiana Completions

    • Bledsoe 19-16-14 H #1, Chesapeake Operating:  16.656 MMcf/day IP, on 22/64 in. choke, at ? psi; Metcalf Field, Caddo Parish, S19/T16/R14; res. A, serial #240362
    • Freeman 5-16-15 H #1, Chesapeake Operating:  13.056 MMcf/day IP, on 22/64 in. choke, at ? psi; Johnson Branch Field, Caddo Parish, S5/T16/R15; res. A, serial #240468
    • Hamel Family #1, Petrohawk Operating:  7.819 MMcf/day IP, on 16/64 in. choke, at 7,457 psi; Cedar Grove  Field, Caddo Parish, S37/T17/R13; res. A, serial #239502
    • Hutchinson Heirs 8 H #1, Petrohawk Operating:  8.167 MMcf/day IP, on 14/64 in. choke, at 7,776 psi; Elm Grove Field, Caddo Parish, S17/T15/R12; res. A, serial #240529 
    • Curry 12-12-16 H #1, Chesapeake Operating:  14.904 MMcf/day IP, on 22/64 in. choke, at ? psi; Logansport Field, DeSoto Parish, S12/T12/R16; res. A, serial #240509 
    • Sustainable Forest 5 #4-ALT, EOG Resources:  9.556 MMcf/day IP, on 18/64 in. choke, at ? psi; Ten Mile Bayou Field, DeSoto Parish, S5/T11/R12; res. A, serial #240393
    • C E Peace 24 #3, J-W Operating:  18.6 MMcf/day IP, on 24/64 in. choke, at 7,000 psi; Caspiana  Field, DeSoto Parish, S24/T15/R13; res. A, serial #240473
    • Parsons 8 H #1, Petrohawk Operating:  7.891 MMcf/day IP, on 14/64 in. choke, at ? psi; Caspiana  Field, DeSoto Parish, S8/T15/R13; res. A, serial #240538
    • Joanna Carson 4 H #1, EnCana Oil & Gas:  23.884 MMcf/day IP, on 22/64 in. choke, at ? psi; Carroll Creek Field, Red River Parish, S4/T12/R9; res. B, serial #240295
    I will update the Louisiana spreadsheet and maps on Thursday after the DNR weekly release.

    Recent Texas Completions

    Completions:
    • Jobe Shale Unit #1H, Exco Operating:  8.952 MMcf/day IP, 18/64" choke; Carthage Field (Haynesville Shale), Harrison Co.
    • Lamkin #1H, Noble Energy:  7.036 MMcf/day IP, 22/64" choke; Carthage Field (Haynesville Shale), Shelby Co.
    Developmental:
    • Mia Austin  #3H, GMX Resources; Carthage Field (Haynesville Shale), Harrison Co.
    • Penny Lane GU 1 #1H, Samson Lone Star; Carthage Field (Haynesville Shale), Nacogdoches Co.