Saturday, February 25, 2012

Goodrich Tiptoes Into The TMS

Goodrich Petroleum Announces Year-End and Fourth Quarter Financial Results and Revised 2012 Guidance
  • $20 – 45 million in the Tuscaloosa Marine Shale to drill 4 – 8 gross (2 – 4 net) wells
  • The Company has participated for a 4.5% non-operated working interest in the Anderson 17H-1 well in Amite County, Mississippi.  The well, which was drilled with an approximate 7,300 foot lateral, is in completion phase with initial production expected early in the second quarter.  For the remainder of 2012, the Company currently expects to participate in one to five additional non-operated wells for a small working interest and two to five operated wells with an approximate blended average working interest of 60%.  The first operated well is expected to commence in early May.  With continued success, the Company will accelerate development in the play at the appropriate time. 
  • Source: http://phx.corporate-ir.net/phoenix.zhtml?c=83169&p=irol-newsArticle&ID=1664136&highlight=
Management presentation:
http://www.goodrichpetroleum.com/presentations/MgmtCurrent.pdf

     

    Wednesday, February 22, 2012

    NAPE Exhibit Hall

    Come by our booth at NAPE and share some ideas on the Tuscaloosa Marine Shale and Austin Chalk.
    Booth: 5147/49
    No free stuff. No magicians. No pretty girls.  Just a few pretty maps.


    NAPE Exhibit Hall Layout

    Fracking Report Results

    Study Says Fracking is Safe In Theory But Often Not In Practice

    A university study asserts that the problems caused by the gas extraction process known as hydraulic fracturing, or “fracking,” arise because drilling operations aren’t doing it right. The process itself isn’t to blame, according to the study, released today by the Energy Institute at the University of Texas at Austin.
    The report is likely to add new fuel to a blazing controversy over fracking. Researchers reviewed the evidence contained in the reports of groundwater contamination from three prominent shale-rock formations where the process is employed: the Barnett Shale in North Texas, the Marcellus Shale in Pennsylvania, New York and other areas of Appalachia; and the Haynesville Shale in western Louisiana and northeast Texas.
    The groundwater contamination is graphically portrayed in the documentary “Gasland,” which showed residents near shale-gas operations setting their drinking water on fire as it came out of the tap. Worries about such contamination have sparked political resistance to fracking, leading some states and countries to hold up new drilling operations.
    At the same time, shale gas is seen as an increasingly important domestic energy source. About a quarter of U.S.-produced natural gas currently comes from shale, and that proportion is projected to rise to nearly half by 2035. Last month, President Barack Obama suggested that the natural gas industry could support 600,000 jobs in America by the end of the decade, in large part due to the rise of hydraulic fracturing. In its latest budget request, the White House proposed new studies by the Environmental Protection Agency to ensure that fracking is done safely.

    People take part in a rally against hydraulic fracturing at the Legislative Office Building in Albany, N.Y., on Jan. 23. New York state legislators are considering a number of bills to limit fracking.
    “It’s a game-changer in terms of the energy balance,” study leader Chip Groat, associate director of the Energy Institute, told journalists today. He and other scientists discussed the report in Vancouver, Canada, at the annual meeting of the American Association for the Advancement of Science.
    Where does fracking go wrong?
    Hydraulic fracturing involves drilling deep into shale beds, then injecting water, sand and chemicals under high pressure to shatter layers of rock — liberating trapped pockets of natural gas. The gas is captured for energy use, but the water and other byproducts have to be cleaned up. The procedure has been used since the 1950s, but it’s become far more widely applied in recent years due to advances in horizontal-drilling
    technologies.
    The researchers concluded that many of the reports of contamination can be traced to above-ground spills or other mishandling of the wastewater, Groat said. Other causes of the contamination include underground casing failures or poor cement jobs. “These problems are not unique to hydraulic fracturing,” Groat said in a news release.
    In the reports reviewed by the researchers, “we found no direct evidence that hydraulic fracturing itself … was a cause for concern,” he told journalists at the AAAS meeting. He acknowledged, however, that shale gas development “can be bungled” due to problems with drilling and extraction techniques used closer to the surface.
    Such problems are most likely behind the water-on-fire phenomena documented in “Gasland.” But it’s difficult to identify precisely what the problem was or what the long-term effect will be without before-and-after data, Groat said.
    “We really feel hobbled in a lot of these [cases] by the lack of baseline information,” he observed.

    Ray Kemble delivers fresh water on Jan. 18 to family members whose water was contaminated due to a shale-gas drilling operation hydraulic fracturing in Dimock, Pa.
    Today’s release of the final report follows up on a preliminary version that was issued last fall. In addition to discussing the causes of contamination, the report evaluated the ability of states to enforce existing regulations, and analyzed the public perceptions surrounding fracking.
    Among the other findings:
    • Natural gas found in water wells within some shale gas areas, such as the Marcellus Shale, can be traced to natural sources. The report said the gas was probably present before the onset of shale gas operations.
    • Some states have actively addressed the regulatory issues surrounding shale gas, but most regulations were written before the process became widespread. In those cases, regulations may need to updated to reflect new situations. However, “there isn’t the need for new regulatory frameworks,” Groat said.
    • News coverage of the controversy has been “decidedly negative,” and few media reports mention the scientific research related to the process.
    • Surface spills of the fluids used in the fracking process were judged to pose a greater risk to groundwater sources than the fracking itself.
    The Energy Institute said its report was conducted using general university funds, rather than specific grants from energy-industry companies or environmental groups. However, the institute said the Environmental Defense Fund assisted in developing the scope of work and the methodology for the study. The EDF said it reviewed drafts of the report during the course of the project but did not contribute to its conclusions.
    Not the final word
    Scott Anderson, senior policy adviser for the Environmental Defense Fund’s energy program, discussed the report in a blog posting published after the report’s release. “If the problem isn’t hydraulic fracturing, then what is?” the headline asks. Here’s some of what Anderson said:
    “As has been the case in other inquiries, the University of Texas study did not find any confirmed cases of drinking water contamination due to pathways created by hydraulic fracturing. But this does not mean such contamination is impossible or that hydraulic fracturing chemicals can’t get loose in the environment in other ways (such as through spills of produced water). In fact, the study shines a light on the fact that there are a number of aspects of natural gas development that can pose significant environmental risk. And it highlights the fact that there are a number of ways in which current regulatory oversight is inadequate.”
    Anderson said the report deserved widespread attention, but “it is by no means the final word on these topics.”
    Groat said the report was based on a review of previously published data rather than fresh field observations. “We did not go out and measure things,” he acknowledged.
    He said further studies will be conducted into the atmospheric and seismic impact of hydraulic fracturing — two much-debated environmental issues that were not addressed in detail in the newly issued report. The Energy Institute also plans to conduct a detailed case study on groundwater contamination in Texas’ Barnett Shale, as well as a field investigation into the effects of shale gas drilling on the water above and below fracturing sites in the Barnett Shale.
    “Certainly more work needs to be done,” Groat said.
    Source: PeakOil.com

    Encana Applies For Larger Unit at Anderson 18H

    Encana is applying for a second large unit to accomodate multiple laterals.

    
    Source: Southern Herald
    

    Scout Report

    A Scout Report will not be published this week due to NAPE.

    Tuesday, February 21, 2012

    Devon Releases Soterra Initial Potential

    Devon released the following initial potential for the Soterra 6H #1

    COMPLETED 2/7/12 AS A OIL WELL IN THE TMS RA SUA RES; PM F 35 BOPD; 2100 CP FTP; 06/64 CK; 267 BWPD; 38.2 GRVTY; PERFS 13108-16829' (ST: 10)

    This might resemble the same approach used when the initial potential for the Weyerhaeuser 73H #1 was released.

    Sunday, February 19, 2012

    Encana Plans 10000' TMS Lateral

    Encana continues to be the leader in the Tuscaloosa Marine Shale Play.  The company is pursuing a unit in Amite County that will accomodate a 10,057' lateral (Joe Jackson 4H #2, 4-2n-3e).  Encana was the first to drill over an 8000' lateral in the Haynesville.  This will be one to observe.

    Source: Mississippi Oil & Gas Board

    Saturday, February 18, 2012

    Encana Earnings Call - February 17, 2012

    Tuscaloosa Marine Shale highlights:
    "In the Tuscaloosa marine shale, where Encana currently controls about 290,000 net acres, we recently completed 2 wells. The first well, which I mentioned during our third quarter conference call, was a completion of a well drilled by a previous operator and its production averaged 330 barrels of oil per day in its first month. The second well which was drilled and completed by Encana, saw production averaging about 700 barrels per day from 17 completed stages in the first month. We plan to operate 3 rigs in the Tuscaloosa throughout the spring and we plan to drill up to 6 wells by midyear.  In the Tuscaloosa marine shale, where Encana currently controls about 290,000 net acres, we recently completed 2 wells. The first well, which I mentioned during our third quarter conference call, was a completion of a well drilled by a previous operator and its production averaged 330 barrels of oil per day in its first month. The second well which was drilled and completed by Encana, saw production averaging about 700 barrels per day from 17 completed stages in the first month. We plan to operate 3 rigs in the Tuscaloosa throughout the spring and we plan to drill up to 6 wells by midyear. Also worth noting is that this play produces Louisiana sweet light crude which trades at a premium to WTI pricing."

    Friday, February 17, 2012

    Scout Report - February 17, 2012

    This weeks Scout Report:
    https://sites.google.com/site/tuscaloosatrend/scout-reports

    Play Overview:
    http://www.ameliaresources.com/documents/Amelia%20Resources%20LLC%20TUSCALOOSA%20MARINE%20SHALE%20Play%20Overview%20FEB%202012.pdf

    Unitization:
    https://sites.google.com/site/tuscaloosatrend/home/other-documents

    Google Maps:
     http://maps.google.com/maps/ms?msid=204256365055521729132.0004b5bbdae554174421a&msa=0&ie=UTF8&t=m&z=11&vpsrc=1

    Swift IP's New Austin Chalk well

    Swift Energy just released an initial potential for the GASRS 16-1 well in southeastern Vernon Parish.

    COMPLETED 01/30/2012 AS AN OIL WELL IN THE AUS C RA SUE; PM F; 0 BOPD; 5880 MCFD; FTP 2744; SITP 5380; CP 5000; 48/64" CHOKE; 11874.8 BWPD; <1% BS&W; GOR N/A; GVTY 50; LATERAL PERFS: 14876-17223'

    Encana Provides Tuscaloosa Marine Shale Update

    Encana made this statement in a release yesterday:
    "In the Tuscaloosa Marine Shale, where Encana has about 290,000 net acres straddling the Mississippi and Louisiana border, Encana recently completed two wells. The first well, with five effective completions stages, was a completion of a well drilled by a previous operator. Its production averaged 330 bbls/d of oil production in its first month. The company's second well, with a horizontal lateral length of approximately 5,000 feet drilled and completed by Encana, had first-month, light sweet oil production, which receives a premium to WTI, averaging approximately 700 bbls/d from 17 completed stages. Up to another six wells are planned for the first half of the year and Encana will assess further activity based on the results. 'It is early days, but we are excited by our results to date, which show the Tuscaloosa to be a substantive oil system and Utica/Collingwood shale to hold strong liquids-rich potential. Our teams have made substantive progress in unlocking the commercial potential of these plays,' said Jeff Wojahn, Executive Vice-President & President, USA Division."

    http://www.encana.com/news-stories/news-releases/details.html?release=649543

    Their earnings call webcast is this morning:
    http://www.encana.com/news-stories/news-releases/details.html?release=647901

    Devon's Earnings Call

    Devon had their quarterly earnings call on Wednesday.  Their statement, while brief, is very encouraging regarding their commitment to this "R&D" phase of the play.  Their initial potential released to the state was 120 bopd and in the call they state 186 bopd.
    "In the Tuscaloosa Marine Shale, we have completed our first 2 horizontal wells in the play. The Beech Grove 68H was a short-lateral horizontal and had a series of mechanical problems but still managed to deliver a 24-hour IP of 186 barrels per day. This well is not indicative of what a properly completed long-lateral horizontal well can do in the Tuscaloosa. The second well, the Soterra 6H-1, is just starting to flow back, following the fracture stimulation. We are adding a second rig in the Tuscaloosa in March and expect to have 10 wells down in the play by year end."

    Transcript:
    http://seekingalpha.com/article/369301-devon-energy-s-ceo-discusses-q4-2011-results-earnings-call-transcript

    Thursday, February 16, 2012

    Pryme Energy Announces 3rd Failed Austin Chalk Attempt

    Pryme Energy announced this today about Anadarko's Rabalais 35 #1 Austin Chalk well that they hold a 8.8% working interest in: "it is our view that the well is unlikely to produce commercial quantities of oil and natural gas".  This represents Pryme's third failed attempt in the Austin Chalk in Avoyelles Parish in the past year.  On 12/9/11, Pryme announced an initial potential of 1,167 bopd for the Deshotels 13H #1 well.  In today's announcement, they report that the well is currently producing 60 bopd representing a 95% decline.  They reported that their third well, the Deshotels 20H #1 is currently producing 75 bopd. 

    They may have proven that drilling horizontal wells at 15,000' is a "big boys game".  The company's stock on the Australian Stock Exchange has plummeted over 80% in the past year and is currently trading at "four and a half Australian pennies".

    Stock Chart: Pryme Energy (ASX)
    On a positive note, rumor has it that Atinum plans four wells near Anadarko's Lacour well.

    Press Releases:
    http://www.prymeenergy.com/IRM/Company/ShowPage.aspx/PDFs/2069-43667184/TurnerBayouChalkProjectWellUpdates

    http://www.prymeenergy.com/IRM/Company/ShowPage.aspx/PDFs/2052-45055310/Deshotels13HrecordsInitialPotentialof1167BOPD

    Friday, February 10, 2012

    Scout Report - February 10, 2012

    This weeks Scout Report:
    https://sites.google.com/site/tuscaloosatrend/scout-reports

    Play Overview:
    http://www.ameliaresources.com/documents/Amelia%20Resources%20LLC%20TUSCALOOSA%20MARINE%20SHALE%20Play%20Overview%20FEB%202012.pdf

    Unitization:
    https://sites.google.com/site/tuscaloosatrend/home/other-documents

    Google Maps:
     http://maps.google.com/maps/ms?msid=204256365055521729132.0004b5bbdae554174421a&msa=0&ie=UTF8&t=m&z=11&vpsrc=1

    Devon Proposes Another TMS Unit

    Devon has proposed another 880 acre unit in northern Tangipahoa Parish at Little Silver Creek Field.

    Proposed Unit - Little Silver Creek Field

    Anadarko Permits Two Austin Chalk Wells

    Anadarko permitted a new well and re-permitted an expired permit. Both wells are in Vernon Parish targeting the Austin Chalk.  The GASRS #23 has a lateral planned for over 8000'.  It's rumored that the Lacour #42 will be re-permitted soon.

    Source: SONRIS

    Tuesday, February 7, 2012

    Credit Suisse Conference: Encana Presentation

    Encana's presentation was informative with minimal mention of the TMS.  The Play Life Cycle chart below properly places the TMS in the "new play" category.  It appears to be their only "pure oil" play.  Key statement "we will push our liquids opportunities."

    Their Resource Play Hub's multi-well design is impressive.  One pad, with numerous laterals, provides many advantages including cost savings, minimal environmental impact, and production efficiencies.

    
    Source: Encana
    


    
    Source: Encana
    

    Regional Geology

    Regional tectonic features played a significant role during the deposition of the Tuscaloosa Formation.  The LaSalle Arch and the Wiggins/Hancock County Arches serve as “tectonic bookends” for the Tuscaloosa Fairway.  These large tectonic features exerted control over the orientation and subsequent deposition of the ancestral Mississippi River.  A regional 2D seismic grid and well logs indicate that the ancestral Mississippi River was very prominent along this fairway as far back as Upper Jurassic (Cotton Valley) time. 

    The base of the Tuscaloosa Marine Shale (TMS) structure illustrates the structural nosing caused by these features and exhibits a variance in dip across Louisiana.  The large volume of Tuscaloosa sand deposition and subsequent loading resulted in a gently dipping structure within the Tuscaloosa Fairway.  Prolific Tuscaloosa sand production (green) occurs along this fairway (blue dashed lines).  To the west where Tuscaloosa sand deposition did not occur, much steeper structural dips resulted.  The impact of the Sabine Uplift is evidenced by the southwestern trend of the structure contours.  The cluster of diapiric salt domes down dip of the Tuscaloosa Fairway indicates massive sedimentary loading and a consistent axis of deposition during later geologic time.  The modern day Mississippi River still flows through this fairway today.  McMoRan currently explores for the Tuscaloosa sands downdip of this fairway in the Gulf of Mexico.

    Repetitive, extensive depositional loading events occurred through time and resulted in basinal subsidence, which ultimately led to a unique burial history along the Tuscaloosa Fairway.  Thick accumulations of higher resistivities in the TMS align with the Tuscaloosa Fairway.  The Tuscaloosa sands and the TMS appear to be part of the same hydrocarbon system.  The hydrocarbon source for the Tuscaloosa sands has been determined to be from a combination of Lower Cretaceous, Tuscaloosa shales, and the TMS.  The regional structure might provide some insight into the burial history of the TMS.  The higher resistivities along the Tuscaloosa Fairway provide evidence for a substantial “hydrocarbon kitchen.”  The Tuscaloosa Fairway being positioned in between two significant tectonic features will have likely experienced a different burial history and subsequent thermal maturity than the regions to the east and west.  The region of higher resistivities would provide support for this hypothesis.


    Monday, February 6, 2012

    Drilling Activity

    Sources indicate that Devon will be adding a 2nd rig to the TMS play soon.  Encana, who has been rumored for weeks to be adding rigs, now appears to be slowing down the plan. Several sources indicate that it is for corporate reasons relating to very depressed natural gas prices and not the TMS results.  The initial rates on the Weyerhaeuser 73H-1 and their record drilling time and lateral length on the Anderson 17H-1 are very encouraging.  Sources indicate that after 5-6 completions, a full operational plan will be implemented.

    Encana's webcast tomorrow at Credit Suisse might be informative.
    http://cc.talkpoint.com/cred001/020612a_ah/?entity=24_66RRHM0

    Other upcoming events:

    Encana
    Feb 7, 2012
    Credit Suisse Energy Summit - 2:20PM EST
    Feb 17, 2012
    Q4 2011 - Earnings Release-Tentative

    Devon
    Feb 8, 2012
    Credit Suisse Energy Summit - 12:35PM EST
    Feb 15, 2012
    Q4 and Year-End 2011 - Earnings Conference Call - 11:00AM EST
    May 2, 2012
    Q1 2012 - Earnings Conference Call - 11:00AM EDT

    EOG
    Feb 9, 2012
    Credit Suisse Energy Summit - 12:35PM EST
    Feb 17, 2012
    Q4 2011 - Earnings Conference Call - 9:00AM EST

    Goodrich Petroleum
    Feb 23, 2012
    Q4 2011 - Earnings Conference Call - 11:00AM EST

    Thursday, February 2, 2012

    Eagle Ford Shale: The Early Days

    There appears to be the expectation that the Tuscaloosa Marine Shale should be "hitting home runs" right out of the starting gate.  Below is a list of wells drilled early in the Eagle Ford Shale Play.  Note that most of them were drilled by the leaders in the shale boom.

    As I've stated before, it's going to take 10-20 completions before we know what we have.  Patience and management of expectations will be required.

    Eagle Ford Shale completions
    Eagle Ford max month daily averages vs TMS initial potentials (bopd)