Thursday, June 21, 2012

Encana's Analyst Day - Slides and Commentary

Jeff Wojahn, Encana's EVP & President for the USA Division presented two slides on the Tuscaloosa Marine Shale today at their Analyst Day.
Here are the slides along with my comments.

Source: Encana's Analyst Day - USA Division - Slide 3
Encana has increased their acreage total to 355,000 acres. The company has assembled a significant position in the oil window. 

I believe that this is the first time that Encana has released play reserves.  9.4 billion barrels in place is signficant.  They did not present estimated recoverable reserves on a play level.  Using a 6% recovery, estimated reserves total 564 MMBOE (EOG has reported 6% for the Eagle Ford play). That equates to 1.589 MBOE/Acre.  In a 1000 acre unit, that equates to 1.589 MMBOE.  Based on their estimate of 1250 wells, reserves per well equate to 451 MBO.  In their presentation, they state 730 MBO as a target EUR.  The well estimate along with the total net acres presents one well drilled per 284 acres.  EOG has recently reported spacing in the Eagle Ford between 65-90 acres.

During the Q&A session, they stated that their RPH technological approach will get them to very attractive economics.  They state that they have yet to focus on reducing well costs. It's a target for the 2nd half of 2012. The target this year is $15M well costs for 7500' laterals.  The Haynesville experience will assist with significant cost reduction in the future.

Throughout the presentation they mention joint venture partners.  They did not announce a TMS partner, so we must conclude that a deal has not been completed.  In addition to the Shell rumor, it recently has been rumored that Exxon/XTO might be involved.  One partner for the TMS and Eaglebine makes sense. Stay tuned.

They confirmed that the TMS players are sharing data which is smart.  The synergy between these companies will shorten the learning curve.  Our industry has come a long way the past ten years in this area.

They state that 2012 will continue as a 2 rig program.  The 30 day IP's for the Anderson wells are impressive.


Source: Encana's Analyst Day - USA Division - Slide 4
The "R&D" effort continues to see improving results.  It takes time to optimize drilling and completion designs.  They are flowing the wells at restricted rates to prevent damage to the completion.  They state that they've identified the best zone in the TMS for building curve and landing the lateral.  Eliminating one casing string saves big dollars.  At $100 per barrel, their parameters present attractive economics.  In the Q&A session, they stated that they target a supply cost of $40/barrel.

The "Rate vs Cum" chart illustrates that the Anderson wells should yield better results than the prior wells. Their target of 730 MBO/well looks achievable.

Congrats to the Encana team.  To date, they've been the play leader with regards to acreage acquisition, drilling, frac design, and results.  The TMS appears to finally be gaining the respect it deserves.







3 comments:

  1. The chart from Encana concerning frack stages per well shows total stages and total lateral length but does not indicate the # of stages that were successfully fracked and probably does not indicate the lateral length successfully fracked either. I believe they were shy of successfully completing several stages on at least 2 wells for sure.

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  2. FM,
    You are correct, but obtaining accurate details on each well is difficult. The "attempted" stages is the only "apples to apples" that is consistent. I do track successful stages when the information is obtainable.

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  3. My point was that had they been successful with completing all the stages on these wells, we would have probably seen even better IPs. Encana is doing a fine job and I am glad to be leased to them - even at $250 per acre. Hopefully
    we will see good results on Devon's Murphy and Weyer. wells too. I believe we are in good hands with Encana, Devon and Goodrich working together to make this happen.

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