Monday, January 31, 2011

Recent Texas Completions

  • Blalock "A" #15H, NFR Energy : 5.685 MMcf/day IP, adj. choke; Carthage Field (Haynesville Shale), Harrison Co., Survey: WILSON, F, A-795
  • Letourneau et al 5 #25HH, Anadarko E&P: 8.82 MMcf/day IP, 20/64" choke; Carthage Field (Haynesville Shale), Harrison Co., Survey: RICHARDS, W, A-593
  • Young Grace GU #2H, NFR Energy : 8.011 MMcf/day IP, adj. choke; Carthage Field (Haynesville Shale), Panola Co., Survey: FREEMAN, IM, A-204
  • Halbert Unit #1, Eagle Oil & Gas: 10.035 MMcf/day IP, 11/64" choke; Carthage Field (Mid-Bossier), San Augustine Co., Survey: ROBERTS, SE, A-37

Another Mid-Bossier Completion

Another Middle Bossier Shale well completion was reported this week:

  • Halbert Unit #1, Eagle Oil & Gas: 10.035 MMcf/day IP, 11/64" choke; Carthage Field (Mid-Bossier), San Augustine Co., Survey: ROBERTS, SE, A-37
The spreadsheet and maps have been updated.

Chesapeake/CNOOC: Next Verse, Same as the First

Chesapeake Energy announced yesterday that the company had entered into an agreement with Chinese company CNOOC Limited whereby CNOOC will purchase a one third undivided interest in Chesapeake's 800,000 acre holdings in the Denver-Julesburg (DJ) and Powder River Basins in northeast Colorado and southeast Wyoming (a.k.a. Niobrara Shale). Chesapeake will receive $570 million cash upfront and CNOOC will fund two-thirds of Chesapeake's share of drilling and completion costs up to $697 million.  CNOOC will be CHK's partner in the region with an option to tag along on any new acreage and midstream ventures.

The deal is nearly identical to the one between CHK and CNOOC in the Eagle Ford Shale.

The Niobrara is part of CHK's rush to liquids, as the formation produces both oil and gas.  CHK will be the operator of the JV wells.  The company currently has 16 producing wells in the area and operates five rigs.  With the new investment, the rig count is expected to increase to 10 by year end 2011 and 20 by year end 2012 (hmm, I wonder where those rigs are going to come from...).  Given the pace of development in that area, CHK expects to "ride the carry" until year-end 2014.

Sunday, January 30, 2011

Another Smackover Data Point

The SONRIS web site was down when I posted a comment Friday night about the potential for the Smackover formation that lies below the Haynesville Shale in parts of North Louisiana (and southern Arkansas), so I wasn't able to pull the specifics on the well that was recently completed.  Here they are:

  • Jones O'Brien, Inc. #1-ALT, XTO Energy:  177 BOPD, 0.587 MMcf/day IP on 19/64 in. choke at 2,800 psi, 3361:1 gas-oil ratio; North Red Rock Shongaloo Field, Webster Parish, S11/T23/R9; res. SMK C RB, serial #241685

Note that this well had a 128 foot perforation, from 11,208' to 11,334'.  I see that XTO permitted another Smackover well in S3/T23/R9 called Mary Belle Sale #2-ALT, serial #242043 back in September 2010.  I'm working on getting a copy of the Jefferies analyst report cited in the post.

I did a quick map illustrating these two data points (darker blue is the completed well).  Note that they are both well north of the boundaries of the Haynesville Shale.

Friday, January 28, 2011

Is a Smackover Rush Coming???

Wouldn't it be nice if there were a "liquids rich" play below the Haynesville Shale?  The Smackover formation, which underlies the Haynesville in northern Louisiana and southern Arkansas, has been known of for a long time but drilling it was not considered economical.  But technology has advanced over the past decade and some are thinking the Smackover might be the next big oil play.  An analyst with Jefferies & Co. is now predicting as much.

That would be pretty sweet.  The Haynesville has largely been shunned in investor circles for its dry gas.  It's not that I need the attention, but another round of leasing sure would be fun.  Since the Smackover lies below the Haynesville and most leases have a vertical Pugh clause that only doesn't allow a lessee to drill below their established production, new leases would be in order for most landowners.  Can't you see it?  We can right the  wrongs of the past or get another bite of the golden apple.

A couple of weeks ago, I  noticed a Smackover completion in Webster Parish, (serial #241685).  But it might be best to sit and wait to see how things go before rushing out to buy that brand new Cadillac.  Everyone is looking for the next oil/liquids play and investment analysts love to be the first ones to make a call.  Unfortunately, they are not always right.  Let's hope this guy is...

Haynesville Shale Rig Count: +1 to 151

The weekly Haynesville Shale rig count showed a one rig increase to bring the running count of working rigs to 151.  That figure is 33 rigs lower than the peak rig count achieved July 30, 2010.

U.S. Rig Count: +19 to 1,732

The weekly Baker Hughes rig count showed a 19 rig increase, bringing the total number of working rigs in the U.S. to 1,732.  This week, there were net 11 new oil rigs (809), seven new gas rigs (913) and one new miscellaneous rig (10).  By type, there were eight new vertical rigs, seven new horizontal rigs and four new directional rigs.

In the Haynesville Shale region, inclusive of other formations, the rig count was up four to 177.  Louisiana (117) held steady while Texas (60) increased by four.

Look for the detailed Haynesville Shale rig count late this afternoon/early evening.

Gambling with Cheniere

I've started to get excited - at least a little bit - about the prospect of LNG export from the U.S.  Outside of the Kitimat project in western Canada, the closest possibility of realizing LNG export is converting import facilities at  Freeport, TX and Cameron, LA to export terminals.  It is not a short-term fix to gas prices, as the first facility is at least four years off on the best timeline.

Lest I get too excited, I've got the New York Times to bring me back to reality.  An article in today's edition  about Cheniere Energy (owner of the Cameron, LA facility) discusses the pros and cons of the conversion and paints the CEO of the company as something of a speculator.  More than anything, it reminds me that to create a viable market for natural gas in North America, we have to start at home through organic growth and capturing market share in power generation and transportation.  Export is nice (although it might eventually throw a wrench in pricing and demand), but progress starts at home.

Thursday, January 27, 2011

"Smart Money" Buys Some Dry Gas

News came yesterday that private equity investor KKR purchased a chunk of Barnett Shale property from Conoco Phillips.  The quantity and price were undisclosed, but the assets have total net proved reserves of 93 Bcf.  The land purchased was in the southern part of the Barnett Shale in the dry gas area.  Conoco Phillips retained its acreage in northern part of the play where gas is found with natural gas liquids and oil.

KKR made the acquisition through a recently formed venture KKR Natural Resources, a partnership formed last year with Premier Natural Resources.

I'm sure KKR got a pretty good price for the acreage since dry gas has fallen out of favor with producers, but it might be a smart long-term buy for the investor.  Dry gas assets fit squarely in the strike zone of many patient investors:  it is a currently out of favor asset that has strong long-term potential.  The assets can be bought on the cheap now and if the investor has deep pockets, they can be held until the value is realized.

Exxon on Gas: The Future's So Bright...

Exxon Mobil today released its annual Outlook for Energy report.  The report attempts to divine energy usage through the year 2030, placing energy use in a larger context of time and geography and it forms the basis for the company's strategy going forward.

Among the bottom line conclusions is that developing nations, especially China and India, will drive energy consumption in the next 20 years as a greater percentage of each country's "under-served" population gains access to integral components of modern life, such as automobiles and electricity, and industrial and manufacturing production in developing nations continues to grow at a rapid pace.  Not an earth-shattering conclusion, but it's interesting to see how energy fits into that larger picture.

Of particular interest, as summarized by an article in the Wall Street Journal, is that Exxon sees a brighter future for natural gas, especially to satisfy growing demand in developing nations.  Exxon expects natural gas to supply 26% of the world's energy needs in 2030, up from 21% in 2005, surpassing coal and second only to oil's 32% share.  The red bar on the graph below is natural gas.

New Louisiana Completions

  • Lee 25 H #1, Questar: 12.311 MMcf/day IP on 18/64 in. choke at 8,550 psi; Woodardville Field, Bienville Parish, S25/T15/R10; res. A, serial #240778
  • Campbell 9-15-11 H #1, Chesapeake Operating: 15.312 MMcf/day IP on 22/64 in. choke at 6,673 psi; Elm Grove Field, Bossier Parish, S9/T15/R11; res. A, serial #241395
  • Muslow 32-16-15 H #1, Chesapeake Operating: 12.24 MMcf/day IP on 22/64 in. choke at 5,671 psi; Johnson Branch Field, Caddo Parish, S32/T16/R15; res. A, serial #241040
  • Jackson Davis 34 H #1, EnCana Oil & Gas: 16.877 MMcf/day IP on 22/64 in. choke at 6,960 psi; Caspiana Field, DeSoto Parish, S27/T15/R14; res. A, serial #241591

New Mid-Bossier Completion

A Chesapeake Energy well in Louisiana that has long been on the Mid-Bossier list finally reported a completion:

  • Muench 10 H #1, Chesapeake Operating:  13.104 MMcf/day IP on 22/64 in. choke at 6,750 psi; Benson  Field, DeSoto Parish, S10/T10/R13; res. Mid-Bos/A, serial #240186
The spreadsheet and maps have been updated.

EIA: Storage -174 Bcf to 2.542 Tcf

The weekly EIA working gas in storage report showed a 174 Bcf net withdrawal to bring storage levels down to 2.542 Tcf.  The weekly withdrawal was 60% higher than the withdrawal this week last year (-109 Bcf) and 14% higher than the five year average (-152 Bcf). The current storage level is 9 Bcf higher than this week last year and only 29 Bcf higher than the five year average.  That's a big improvement in two weeks.

The average temperature last week was considerably colder than this week last year (-5.4 degrees), which is the first time in four weeks that the current temperatures were colder than last year's bitter digits.  It was, however, slightly warmer (+0.7 degrees) than the normal temperature for this week.

Wednesday, January 26, 2011

The LNG Debate

There was an interesting piece in yesterday's Wall Street Journal talking about the pros and cons of exporting liquefied natural gas (LNG) from the U.S.  To me it seems like a win-win, but for those industries that have come to love cheap natural gas, the prospect of rebalancing the equation to achieve a natural gas price sustainable for producers is a less palatable idea.  The piece gives a good background on the subject and an update on the current projects, mostly at the Louisiana/Texas border.

The point that jumped out to me was the notion that the export of gas fits squarely in President Obama's strategy to double U.S. exports over the next five years.  The president already is moving towards natural gas for a number of reasons, and this should make lots of sense to him.

GMX Looking for JV Partner

GMX Resources released its year-end reserves and operations update yesterday. The big news was that the company increased its 2010 year-end reserves to 234.1 Bcfe from 25.9 Bcfe at year-end 2009.  That's an 800+% increase.  There were also a few changes in posture I noticed:

  • At the end of the press release:  "The Company has also begun to actively explore opportunities to joint venture with third parties in the future development of its Haynesville/Bossier and, separately, its Cotton Valley Sands undeveloped acreage."  I've had my concerns about the company's ability to finance a Haynesville drilling program, especially at low commodity prices.  They may have to give up some upside, but a partner could help fund a program to drill the company's 61,528 gross (44,032 net) acres.  With the company juicing its reserves at year end, the deal might look more attractive to a third party.

Tuesday, January 25, 2011

Acadian Haynesville Extension Pipeline Proceeds

Enterprise Products Partners and Duncan Energy Partners announced that the first phase construction contract for the joint venture's $1.6 billion, 270 mile Acadian Haynesville Extension pipeline has been awarded to Willbros Group, Inc.  The 42"/36" pipeline will have a capacity of 1.8 Bcf/day and run from Red River Parish southeast to Donaldsonville, LA.

The first phase will take the pipe to Boyce, LA, near Alexandria, and construction is expected to run from February to August 2011.  EPP earlier estimated that construction for the whole project is targeted to end in September 2011 - not sure if that's still on target.

Natural Gas Penetrates Academia

I read that Pennsylvania State University (Penn State) is going to convert its coal-fired power plant to natural gas to avoid having to retrofit it for upcoming pollution regulations.  This, in the heart of coal country?  Interestingly, the plant hasn't been able to burn Pennsylvania coal for a while because it is not the right grade of coal and student activists seem more pissed at coal (rightly so, I'd say) than the fear of hydraulic fracturing and gas drilling.

As stricter pollution requirements are enacted in the next few years, expect to hear more and more of these announcements.  I read last week that the University of Southern Maine will switch from heavy oil to natural gas to generate power.  The Penn State article above notes that Cornell, Duke and the University of North Carolina are among the universities that have recently announced they will convert to natural gas.

Ugh, "Gasland" Nominated for Oscar

Anti-gas propagadocumentary "Gasland" has been nominated for an Academy Award in the category "Documentary (Feature)."  This means we are in for 32 days of fawning over a film that tells one biased and carefully trimmed side of a complex issue.  Not unexpectedly, the drilling industry is not too happy.

Not being one for self-congratulatory entertainment awards shows, I don't put a lot of stock in this news, but I know millions more do.  I doubt people are going to rush to their Netflix accounts to queue up the film, but it certainly won't hurt viewership.  Ultimately, though, the movie probably reached more viewers through showings on HBO last year than it did for all of recognition it received at various film festivals.

I see that "Gasland" is up against a documentary by the my favorite street artist (sort of an oxymoron) Banksy called "Exit Through the Gift Shop."  Both likely will lose to "Restrepo," but I'm no movie critic.  A couple of Banksy images from his trip to New Orleans a couple of years ago to get my mind off Gasland:

Monday, January 24, 2011

Lots of Texas Completions

  • Moseley GU #3H, NFR Energy : 10.136 MMcf/day IP, 26/64" choke; Carthage Field (Haynesville Shale), Harrison Co., Survey: WOOD, ML, A-782
  • Leinart Unit #1H, EOG Resources: 8.166 MMcf/day IP, 22/64" choke; Carthage Field (Haynesville Shale), Nacogdoches Co., Survey: MORA, JM, A-827
  • Irvine Unit #1H, EOG Resources: 10.304 MMcf/day IP, 13/64" choke; Carthage Field (Haynesville Shale), Nacogdoches Co., Survey: WALLING, J, A-588
  • Red River 442 #1H, Exco Operating: 16.609 MMcf/day IP, 22/64" choke; Carthage Field (Haynesville Shale), San Augustine Co., Survey: STEPHENS, J R, A-442

Cubic Announces Three LA Completions

Cubic Energy today announced results from three wells in which Cubic has a working interest but that were completed by other operators.  Note that the initial production figures are 24 hour numbers. The maps and spreadsheets will be updated on Thursday with the addition of other new Louisiana completions.
  • Crow 8 #1, EXCO Operating: 12.91 MMcf/day IP on 22/64 in. choke at 7,302 psi; Bethany Longstreet Field, Caddo Parish, S8/T14/R15; res. A, serial #241780
  • Crow 5 #1, EXCO Operating: 13.566 MMcf/day IP on 22/64 in. choke at 7,223 psi; Bethany Longstreet Field, Caddo Parish, S8/T14/R15; res. A, serial #242000
  • Fisher et ux 20 H #1, El Paso: 13.632 MMcf/day IP on 14/64 in. choke at 7,000 psi; Bethany Longstreet Field, DeSoto Parish, S20/T14/R15; res. A, serial #241847

EXCO Year End 2010 Update

Exco Resources released its 2010 operating results today.  It makes for good reading, especially where it concerns the Haynesville Shale, where the company has become a big player.  The company drilled 92 gross (38.4) wells in 2010 and remains focused on its acreage in DeSoto Parish, LA and the Shelby Trough area in Texas.  The company plans to run 22 rigs in the play through 2011 but has the ability to drop down to 11 if commodity prices don't support drilling activity.

In DeSoto, EXCO has shifted phases from testing and delineation of its acreage to a full field development program using a "manufacturing process" with 80 acre spacing.  During the year, the company performed several multi-well pad drilling and completion operations.  Typically, EXCO uses four drilling rigs per 640 acre unit and two to three fracture stimulation fleets to simultaneously complete the operation. In June 2010, the company completed a four well spacing test over 320 acres and in October it completed an eight well 640 acre (full unit) test.  At year end, the company had 12 units in progress for the full 80 acre development plan and hope to target another 15 in 2011.  The single pad operations save time and money, take less surface land out of commerce and concentrate resources such as water.

Friday, January 21, 2011

Haynesville Shale Rig Count: -5 to 150

The Haynesville Shale rig count dropped by five to 150.  Louisiana saw three fewer rigs (108) and Texas two fewer (42).

Site Change: Full Haynesville Rig Count on "Snapshot"

FYI: Since I have been calculating the Haynesville Shale rig count for one year, I have updated the "Haynesville Shale Snapshot" graphic at the top of the page to show the full Haynesville Shale rig count instead of the north Louisiana count.

Los Angeles Retires Last Diesel Bus for CNG

The Los Angeles County Metropolitan Transportation Authority last week officially (and ceremoniously) retired its last diesel passenger bus.  The LA MTA now has 2,221 compressed natural gas buses to go along with six gasoline-electric hybrids and one electric bus.  The main motivation in Los Angles is air pollution:
"Transit officials estimate that the elimination of diesel engines has reduced the release of cancer-causing particulates from the bus fleet by 80% and greenhouse gases by about 300,000 pounds a day in one of the smoggiest areas of the country."
Los Angeles is not the first city to fully scrap its diesel fleet, but it does have the largest collection of CNG buses in the country.

U.S. Rig Count: +13 to 1,713

The weekly Baker Hughes rig count showed a 13 rig increase, bringing the total number of working rigs in the U.S. to 1,713, the highest level it has been since December 26, 2008.  The number of oil rigs increased by nine to 798, gas rigs increased by four to 906 and miscellaneous rigs held at nine.  By type, Directional rigs were up 14, while horizontal rigs were down one and the number of vertical rigs was unchanged.

In the Haynesville region, inclusive of other formations, the rig count was down by three to 173.  The Louisiana count was down four to 117 and the Texas count was up one to 56.

Thursday, January 20, 2011

New Louisiana Completions

  • Shreve 2 H #1, Chesapeake Operating: 14.016 MMcf/day IP on 22/64 in. choke at 6,285 psi; Cedar Grove Field, Caddo Parish, S2/T16/R14; res. A, serial #240635
  • Tensas Delta Expl Co LLC 8 H #1, Petrohawk Operating: 7.5 MMcf/day IP on 14/64 in. choke at 7,485 psi; Cedar Grove Field, Caddo Parish, S18/T16/R13; res. A, serial #241358
  • Cox Rlt 28 HZ #1, Comstock Oil & Gas: 8.772 MMcf/day IP on 16/64 in. choke at 7,294 psi; Belle Bower Field, DeSoto Parish, S21/T13/R16; res. A, serial #241210
  • John Burford 31 H #1, EnCana Oil & Gas: 11.348 MMcf/day IP on 21/64 in. choke at 5,669 psi; Bethany Longstreet Field, DeSoto Parish, S31/T14/R14; res. B, serial #240858

EIA: Storage -243 Bcf to 2.716 Tcf

The weekly EIA working gas in storage report showed a 243 Bcf weekly withdrawal from storage, bringing the storage level down to 2.716 Tcf.   The weekly withdrawal was on par with last year's weekly change -248 Bcf) but significantly greater than the five year average for this week (-133 Bcf).  The current storage level is 2.8% higher than last year at this same time and 1.9% higher than the five year average (down from a 5.8% discrepancy last week).

Temperatures last week were slightly warmer than the same week last year (although the withdrawal was about the same) but 4.7 degrees colder than average.

Monday, January 17, 2011

Texas Completion/Activity

  • Haley Shale Unit #1H, Exco Operating: 15.553 MMcf/day IP, 24/64" choke; Carthage Field (Haynesville Shale), San Augustine Co., Survey: FOUNTAIN, JJ, A-632

Permit Activity:
  • Hassell Gas Unit #2H  , EOG Resources; Carthage Field (Haynesville Shale), Nacogdoches Co. Co., Survey: YBARBO, J I , A-60
  • Taylor "A" - Taylor (Allocation) #23 H , Devon Energy; Carthage Field (Haynesville Shale), Harrison Co. Co., Survey: WILSON, T D , A-811

Saturday, January 15, 2011

Happy Birthday

"...I have a dream that one day this nation will rise up and live out the true meaning of its creed, 'We hold these truths to be self-evident, that all men are created equal'..."

Dr. Martin Luther King, Jr.
Washington, D.C.
August 28, 1963

Friday, January 14, 2011

Haynesville Shale Rig Count: Unchanged at 155

There were a lot of rig moves last week - especially in Louisiana - but the bottom line remained unchanged across the board.  Haynesville rigs stayed at 155, unchanged in both Louisiana (111) and Texas (44).

U.S. Rig Count: Unchanged at 1,700

The weekly Baker Hughes U.S. rig count was unchanged for the week, holding at 1,700.  While quiet at the surface, there was a net exchange of 12 gas rigs for oil rigs, as the number of gas rigs fell by 12 and the number of oil rigs gained 12.  By type, there was an increase of eight directional rigs and one horizontal rig, while the number of vertical rigs dropped by nine.

In the Haynesville Shale region, inclusive of other formations, the rig count dropped by two to 176, with a one rig increase in north Louisiana to 121 and a three rig decrease in east Texas to 55.  The regional count hasn't been this low since December 11, 2009.

Uneventful January Lease Sale

The Louisiana Mineral Board's monthly lease sale was pretty unremarkable from the perspective of the Haynesville Shale.  Only 48 acres of leases were successfully bid upon with an average bonus price of $4,275 (weighted average $3,790).

Another 633 acres of land in Caddo Parish in township 17, ranges 13 to 15, received no bids.  The bid packages were made up lots of small parcels in and around Shreveport, so it's not a big surprise that nobody bit.  Two other parcels containing 152 acres in Sabine Parish received low bids ($2,600/acre and $5,011.50/acre, respectively) and were not awarded.

Thursday, January 13, 2011

Lots More New Louisiana Completions

  • Ches Roy 26-15-10 H #1, Chesapeake Operating: 15.648 MMcf/day IP on 22/64 in. choke at 7,204 psi; Caspiana Field, Bienville Parish, S26/T15/R10; res. B, serial #241332
  • Henry D Thrash 24 H #1, Petrohawk Operating: 5.913 MMcf/day IP on 12/64 in. choke at 8,119 psi; Greenwood-Waskom Field, Bossier Parish, S25/T16/R11; res. A, serial #240813
  • Pieronnet 26-15-12 H #1, Chesapeake Operating: 16.08 MMcf/day IP on 22/64 in. choke at 7,640 psi; Metcalf Field, Caddo Parish, S26/T15/R12; res. B, serial #241019
  • Bryan 9-16-15 H #1, Chesapeake Operating: 12.264 MMcf/day IP on 22/64 in. choke at 6,094 psi; Metcalf Field, Caddo Parish, S9/T16/R15; res. A, serial #241093

EIA: Storage -138 Bcf to 2.959 Tcf

The weekly EIA working gas in storage report showed a 138 Bcf net withdrawal, bringing the total gas in storage to 2.959 Tcf.  The weekly withdrawal was considerably lower than last year's figure of 255 Bcf (because of the very cold weather) but above the five year average of 109 Bcf.

The current storage level is 69 Bcf (+2.4%) higher than last year and 161 Bcf (+5.8%) higher than the five year average.

Wednesday, January 12, 2011

Ticker Change: Rig Count

I made a change on the "Haynesville Shale Shapshot" at the top of the page.  The rig count column now compares the current Louisiana Haynesville Shale rig count versus historical numbers.  Previously I used the rig count for all of north Louisiana, which I felt was a good proxy for Haynesville activity since +/-90% of the rigs drilling the area were targeting the Haynesville Shale.  Now that I have been collecting rig-by-rig data for the past year, I have a full 12 months of comparable data.  In two weeks (when I have a full 12 months of Texas rig data) the graphic will change to all Haynesville rigs.

I also started calling it the "Snapshot" instead of "Ticker" because I thought it was a better reflection of the data.

Tuesday, January 11, 2011

Recent Louisiana Completions

Here is a batch of recent completions.  I will update the maps and spreadsheet later this week after posting another batch.
  • Flournoy et al 27 H #1, Goodrich Petroleum: 12.538 MMcf/day IP on 18/64 in. choke at 6,350 psi; Greenwood-Waskom Field, Caddo Parish, S27/T17/R16; res. A, serial #240638
  • Caddo Par 30-15-15 H #2-ALT, Chesapeake Operating: 11.112 MMcf/day IP on 22/64 in. choke at 4,701 psi; Bethany Longstreet Field, Caddo Parish, S19/T15/R15; res. A, serial #240818
  • CHK LA Min 23-11-13 H #1, Chesapeake Operating: 18.342 MMcf/day IP on 22/64 in. choke at 7,335 psi; Trenton Field, DeSoto Parish, S23/T11/R13; res. A, serial #240059

Honda to Bring Natural Gas Civic to U.S. in 2012

In a long-awaited release, Honda Motor Co. announced at the Detroit Motor Show that it would introduce a compressed natural gas (CNG) version of its 2012 Civic in the U.S.  Previously, the car was only available to the general public in a few states.  The CNG version coincides with a redesign of the Civic model.  It also comes at a time when gas prices are expected to rise and small vehicles are expected to be very popular.

Honda says the CNG Civic GX as the only OEM-built, dedicated CNG passenger car assembled in America.  The company also touts the fact that the car will have nearly zero emissions.

I always talk about the chicken and the egg concept where it concerns CNG.  The introduction of an extremely popular vehicle model in a CNG format will help accelerate the development of CNG fueling infrastructure, which will beget more CNG vehicles. And so on, and so on...

Monday, January 10, 2011

New Texas Completions/Permits

  • Jenkins East 1 #1H, Berry Oil: 8.285 MMcf/day IP, 18/64" choke; Carthage Field (Haynesville Shale), Harrison Co., Survey: CARROL, E, A-135
  • Hezekiah #1H, Chesapeake Operating: 18.557 MMcf/day IP, 24/64" choke; Carthage Field (Haynesville Shale), Sabine Co., Survey: CARTWRIGHT, H, A-83
  • CC Locke #1H, Devon Energy: 1.365 MMcf/day IP, Adj./64" choke; Carthage Field (Haynesville Shale), Shelby Co., Survey: INMAN, J, A-378

New Drilling Permits:
  • Penny Lane GU 1 #1H  , Samson Lone Star; Carthage Field (Haynesville Shale), NACOGDOCHES  Co. Co., Survey: YBARBO, J, A-60

Friday, January 7, 2011

Haynesville Shale Rig Count: -3 to 155

The weekly Haynesville Shale rig count fell by three rigs to 155 working rigs.  The count fell by four in Louisiana to 111 and increased by one in Texas to 44.


U.S. Rig Count: +6 to 1,700

The weekly Baker Hughes rig count showed a six rig increase to an even 1,700.  Oil rigs were up 12 to 777, while gas rigs were down five to 914 and miscellaneous rigs were down one to nine.  By type, horizontal rigs were up 19, while vertical rigs dropped by 12 and directional rigs decreased by one.  Horizontal rigs now represent 56.8% of the rigs operating in the U.S. today, a record high.

In the Haynesville region, inclusive of other formations, the rig count dropped by one to 178.  There were three fewer rigs operating in north Louisiana (120) and two new rigs in east Texas (58).

Chesapeake's Austerity Strategy?

Yesterday, Chesapeake Energy released its preliminary 2010 operating results and 2011-12 strategic and financial plan.  I'll spare you the numbers, but I found two interesting takeaways.

First, Chesapeake has now hedged approximately 96% of its expected 2011 natural gas production at the average price of $5.84/Mcf.  For 2012, the company has hedged approximately 17% of its expected natural gas production at an average price of $6.19/Mcf.  Not bad prices considering the market uncertainty and general malaise of the natural gas commodity market.  Interestingly, the company has only hedged 5% of its 2011 and 1% of its 2012 expected oil production.  They are on board with T. Boone Pickens in expecting oil to rise above $120/barrel.

Second, the company announced a new strategic and financial plan called the "25/25 Plan."  Chesapeake will reduce its long-term debt by 25% and cut its production growth rate to 25% (from a planned 30-40%).  How?  First, the company will continue to monetize its assets.  These deals will reduce net production going forward and bring in up-front cash to pay debt.  To the relief of shareholders, Chesapeake says it will not issue any common or preferred stock to achieve the objective.  Second, the company will cut back on leasehold spending.

More Detail on Comstock Capex

Last month I noted that Comstock plans to spend $522 million on capital expenditures in 2011.  The table below shows the company's proposed breakdown by location of its spending in the Haynesville Shale, where it has allocated $348 million (67% of the budget).

I've seen some chatter about a farm-out or joint venture deal for some of Comstock's Haynesville acreage, but I'm not sure if a deal is figured into the 2011 capital budget.  Sounds like a deal might be imminent.  

Thursday, January 6, 2011

More Louisiana Completions

  • Dutton Fly et al 27 H #1, Petrohawk Operating: 5.528 MMcf/day IP on 10/64 in. choke at 7,934 psi; Cedar Grove Field, Bossier Parish, S34/T17/R13; res. A, serial #241366
  • Berry 25 H #1, Chesapeake Operating: 14.112 MMcf/day IP on 22/64 in. choke at 6,323 psi; Caspiana Field, Caddo Parish, S25/T15/R15; res. A, serial #241036
  • EMW 21 H #1, Petrohawk Operating: 6.913 MMcf/day IP on 14/64 in. choke at 7,085 psi; Caspiana Field, Caddo Parish, S28/T15/R12; res. A, serial #240400
  • Magnolia Point Lands 38 H #1, Petrohawk Operating: 7.584 MMcf/day IP on 14/64 in. choke at 8,365 psi; Elm Grove Field, Caddo Parish, S38/T15/R12; res. A, serial #241432

EIA: Storage -135 Bcf to 3.097 Tcf

The weekly working gas in storage report showed a 135 Bcf decrease, bringing the current storage levels to 3.097 Tcf.  The weekly withdrawal was slightly below last year's 149 Bcf withdrawal (remember how cold January was last year?) but significantly higher than the five year average of 79 Bcf.

Temperatures across the country were only slightly colder than normal in aggregate (and slightly warmer than last year), but temperatures in the Southeast U.S. were 6.9 degrees below normal for the week.

Wednesday, January 5, 2011

Mid-Bossier Shale Data Updated

I've posted an update to the Mid-Bossier Shale map and spreadsheet.  There are no new wells noted, but I updated some initial production and pressure data as well as adding survey data and completion dates (where available) for the Texas wells.  I expect to post some new results in the next few weeks, but I wanted to fill in some missing data in the meantime.

Tuesday, January 4, 2011

New Louisiana Completions

Below is a batch of new Louisiana completions.  I expect another batch later this week and will update the spreadsheet and maps after that round.
  • Willis 14 H #1, Goodrich Petroleum: 12.042 MMcf/day IP on 20/64 in. choke at 5,400 psi; Greenwood-Waskom Field, Caddo Parish, S14/T17/R16; res. A, serial #240316
  • Ratzburg 18 H #1, Petrohawk Operating: 10.027 MMcf/day IP on 16/64 in. choke at 8,278 psi; Caspiana Field, Caddo Parish, S19/T15/R11; res. B, serial #241232
  • CHK LA Min 2-13-12 H #1, Chesapeake Operating: 16.515 MMcf/day IP on 22/64 in. choke at 8,060 psi; Red River-Bull Bayou Field, DeSoto Parish, S2/T13/R12; res. C, serial #241124
  • LA Bokay 33 H #1, Petrohawk (KCS): 5.761 MMcf/day IP on 14/64 in. choke at 7,050 psi; Benson Field, DeSoto Parish, S28/T11/R14; res. A, serial #240504

Monday, January 3, 2011

New Texas Activity

Activity through January 2, 2011:

  • ADJ Minerals 153 Shale Unit #1H, Exco Operating: 18.191 MMcf/day IP, 22/64" choke; Carthage Field (Haynesville Shale), San Augustine Co., Survey: HT&B RR CO, A-153
New Permits:
  • Shaw-Bennett (Allocation) #9 H, GMX Resources; Carthage Field (Haynesville Shale), Harrison Co. Co., Survey: EARL, D, A-235
  • Lilly #1 H, EOG Resources; Carthage Field (Haynesville Shale), Nacogdoches Co. Co., Survey: CORDOVA, J & BROS., A-20
  • Grizzlies #1 H, Exxon/XTO; Carthage Field (Haynesville Shale), Nacogdoches Co. Co., Survey: YBARBO, JI, A-60
  • Hill Heirs Deep Gas Unit #1 H, Exxon/XTO; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: MANN, W , A-431
  • David Dunham #2 (vertical), Classic Operating; Carthage Field (Haynesville Shale), Panola Co. Co., Survey: HALEY, CQ, A-274
  • J C McSwain Gas Unit "B" #1 H, BP Ameica; Carthage Field (Haynesville Shale), Shelby Co. Co., Survey: MITCHELL, O, A-1205