Tuesday, March 24, 2015

Comstock to Reduce 2015 Haynesville Capex

Comstock Resources announced yesterday that it will reduce its capital expenditures in this low commodity price environment.  Total capex will drop 22% to $248 million.  Haynesville capital spending will drop from $165 million to $95 million, and the company will drop one of its rigs (with an early termination fee of $2.4 million).  Because Comstock has had some success with its recent recompletion of the Pace 33 well, the logic follows that it is a more efficient use of capital to slide down the risk/reward continuum to stimulate old existing wells to get incremental gas than it is to drill new wells.  It only plans to drill nine Haynesville wells in 2015, down from 14 and recomplete 23 wells, up from 17.

Here is what Comstock had to say about its refracking program:
"(T)he Pace #33 (is) currently flowing at 4 million cubic feet per day ("MMcf/d") of natural gas on a 22/64-inch choke. Before the refrac, the well had been flowing at 0.5 MMcf/d. Following the refrac, the well experienced an eight-fold increase in flowrate and a three-fold increase in flowing pressure. Total cost for the refrac of the well was approximately $2 million. The Company expects to achieve cost reductions on future refrac projects of 10% to 15% below the costs for the Pace #33, and estimates internal rates of return of 40% to 69% on the refrac program assuming natural gas prices of $3.00 to $3.50 per thousand cubic feet. The Company has identified approximately 185 future Haynesville refrac candidates."
I had previously noted that Comstock found religion with enhanced completion techniques on new drills.  I guess persistent low gas forced them to look for some new religion, and they found it in refracking.

1 comment:

Anonymous said...

What do you think is going on now? I don't think the market gets there play.