Wednesday, February 2, 2011

More on Smackover

I like saying "Smackover" - the name has a emphatic certain ring to it that "Haynesville" lacks. Thanks to a reader for sending me a copy of the report on the potential for the Smackover formation issued by an analyst at Jefferies & Co. that I mentioned a few days ago.  The report in question is more of a one page note than an in-depth research report, but it makes some interesting points.

In referencing the Smackover, Jefferies is talking about the Lower Smackover source rock that lies below the Upper Smackover reservoir rock, which has been targeted with mixed results for much of the 20th century.  From the note, Jefferies considers the Lower Smackover to be:
"...an exceptionally thick, organic rich, laminated lime mudstone that is the source rock for regional production... Could be another example of a low permeability/low porosity zone that is commercialized through horizontal drilling and multi-stage fracture stimulation." 

The Lower Smackover is also said to be low in clay content, a good thing since clay causes problems in effectively developing the formation.

The note points to a Brammer Engineering well drilled into the Lower Smackover in Columbia Co., AR, but results from the penetration are not public.  The well did touch off a round of leasing in the area.  The note  considers Webster and Claiborne Parishes, LA as well as Lafayette, Columbia and Union Co., AR as prospective for the Lower Smackover.

But speculation about the potential for the formation, especially its liquids content, is very early and Jefferies is unable to point to a successful horizontal well in the play and "drainage from the vertical wells is too limited to be economic."  The opportunity, says Jefferies, might be with producers that speculatively secured leases in the Haynesville land rush that are now known to be north of the economic reaches of the play or with producers that own legacy leases that might permit drilling below existing production.  Either might be prospective for the Lower Smackover without additional leasing expense.

I serve up this information as a set of data points and not an endorsement of a big new play, although I certainly will keep a close eye on it over the next year.

2 comments:

Harven McKenzie said...

Robert, any chance of getting a copy of the Jeffiers report.

Robert Hutchinson said...

Email me directly at haynesvilleplay (at) gmail.com.