Wednesday, November 9, 2011

Decreased Permit Activity in Texas (Only Two New Ones This Week)

There were only two new Haynesville Shale drilling applications filed in Texas over the past week (11/2/11 - 11/8/11), and both are to be drilled on the same well pad.  Since permits are a leading indicator of drilling activity (although not perfectly correlated), this appears to be a negative sign for the Haynesville Shale.

But it is always dangerous to extrapolate a trend from a single data point, so I looked back over the past thirteen weeks of Haynesville permits.  Over that period, there were 5.3 new permits per week.  Looking back over the past six weeks, that number dropped to 4.4 new permits per week.  That may be a sign of slowing activity.

Looking back at rig counts over the past six months, the rolling average four week count in Texas has remained fairly steady.  Over the summer, it averaged 33 working rigs.  Since the beginning of September, the rig average is also 33, but the it has dropped to 31 over the past four weeks.  

Drilling activity in the Texas Haynesville Play has always been concentrated among three or four players with a handful running a couple of rigs.  Over the past few months, there are still four big players (XTO, EXCO, EOG and now Anadarko), but many of the companies running a couple of rigs now run one or are sitting on the sideline.  

In terms of geography, the locations of drill sites have shifted.  A couple of years ago, there was a fairly equal distribution over the Haynesville counties.  About a year and a half ago, there was a shift towards a the southern part of the play.  Today, the concentration has shifted a slightly towards the middle, as 60% of the Texas rigs run in the trough between Nacogdoches and San Augustine Counties.  

The bottom line is that rig counts are creeping down, but that's no surprise.  What's interesting to watch is how the activity concentration keeps shifting and to see who which producers sit atop the "leader board."

New Permits, 11/2/11 - 11/8/11:
  • Grizzlies (SL) DU #3H, XTO Energy; Carthage Field (Haynesville Shale), Nacogdoches Co. Co., Survey: CHIRINO, JA, A-17 
  • Grizzlies (SL) DU #3HB, XTO Energy; Carthage Field (Haynesville Shale), Nacogdoches Co. Co., Survey: CHIRINO, JA, A-17


Anonymous said...

Robert Hutchinson said...

For those who don't follow the link, it's to an 11/7/11 permit for XTO Energy's ExxonMobil #2 H (#244072) in Morehouse Parish (S2/T20/R8) drilling to ~8,000' with a ~5,000' lateral. The results will be EAGERLY anticipated. I'll keep an eye on the rig list to see when it starts drilling.

Devon's Crossett 31 #1 (#243422) is currently drilling in Morehouse. This week Devon began drilling the lateral at 8,196'.