Tuesday, July 31, 2012

Shale Peak Month Rates - A Comparison

IHS just published this in a recent report:
"Strong drilling results, coupled with the large prospective area, and magnitude of the resource potential, combine to make the Eagle Ford Shale play in South Texas a contender for the best tight oil play in the US, according to a new report from IHS.  According to the IHS Herold Eagle Ford Regional Play Assessment, typical well performance as well as peak-month production of the Eagle Ford’s best wells exceeds wells drilled in the Bakken Shale, often considered the tight oil standard. The favorable outlook for the Eagle Ford is reflected in a highly competitive merger and acquisition (M&A) environment, with implied deal values averaging $14,000 per acre for Eagle Ford acreage in 2011 and top prices approaching $25,000 per acre.  “Our analysis at IHS indicates that Eagle Ford drilling results to date appear to be superior to those of the Bakken,” said Andrew Byrne, director of equity research at IHS and author of the study. “Although the well counts aren’t nearly as high at this point in development of the Eagle Ford, the peak of the well-distribution curve compares favorably with the Bakken.”  The most frequent well result of the Eagle Ford is around 300 barrels per day to 600 barrels-per-day for a peak month production average, Byrne said, compared with 150 barrels-per-day to 300 barrels-per-day for the Bakken. The best wells in the Bakken have an average peak-month production rate of 1,000 barrels-per-day or more, while the Eagle Ford central area’s top wells are even better on a barrels-of-oil-equivalent (BOE) -per-day basis."
That presents a nice "backdrop" for the first partial months for the Anderson 17H and 18H that has just been released.
Encana Anderson 17H-1 (19 days): 810 bo, 161 mcf, 475 bw
Encana Anderson 18H-1 (13 days): 900 bo, 91 mcf, 549 bw

Friday, July 27, 2012

Devon Murphy 63H-1 Update

The Devon Murphy 63H-1 is preparing to be fracked.  I understand that the delay has been due to sourcing water.  The base of the TMS in the well is approximately -13800' TVD-SS.  It represents the deepest horizontal TMS test to date.  I believe it to be in an excellent geological location.  According to SONRIS, there will be 16 stages across perforations of 14353'-19155' representing 300' spacing.  Devon's most recent frac, the Weyerhaeuser 14H-1 averaged 317,500# of proppant per stage.  This represented a significant increase from their Richland Farms 74H-1 well where the average was 91,600#. 

With our small database of recent TMS completions, we can start making bold predictions about potential outcomes.  The three charts below present results from the existing TMS completions.  A quick examination would indicate that the well should have an initial potential in the range of 450-500 boepd.  Wells with similar number of stages with longer laterals have had results in the 695-777 boepd range.  I anticipate that this completion will be better than predicted because of its strong geological attributes, higher pressure, and a higher GOR.  I believe that this completion will have the highest GOR to date (>900). I anticipate a boepd > 600.  For the reasons stated above, it could be even higher.  This should be Devon's best completion to date. 

Keep in mind the words of the late, great Albert Einstein:
“When the number of factors coming into play in a phenomenological complex is too large scientific method in most cases fails. One need only think of the weather, in which case the prediction even for a few days ahead is impossible.” 

I understand that they are already building two locations adjacent to it.  Stay tuned.

EOG Update

The EOG Dupuy #1 was running intermediate casing at 11205' earlier in the week. I hear that they should be logging the well this weekend.  Assuming that they will obtain a conventional core, it will be interesting to see the intervals acquired.
EOG has permitted their second well, the Gauthier #1.  It has a PTD of 15000' and should intersect the TMS at approximately -13700'.  Assuming that this is a vertical hole, like the Dupuy #1, that indicates that they plan to drill down into the Lower Cretaceous carbonates.  At the TMS interval, this location is similar to depths of the Devon Murphy 63H-1.  I'm glad to see EOG going deeper early. More pressure, more gas, and more calcite will help.

Rumors have it that they are considering acreage deeper in the TMS.

Base of TMS structure; EOG permitted wells;

Thursday, July 26, 2012

400,000 Page View Threshold

The Tuscaloosa Marine Shale continues to gain steam.  Today the blog crossed over the 400,000 page view threshold.  With four operators drilling, and a fifth to commence soon, the second half of the year should be exciting.
Page Views: 400,000          Posts: 382

Our charity fundraising campaign:
Donors: 82
Total donations: $32,270
% of Goal Reached: 32%
Months remaining: 5
Once again, thank you to the Tuscaloosa Trend "Wall of Fame".  Your appreciate and generosity is appreciated.

Wednesday, July 25, 2012

Stone Energy Seeks A TMS Buyer

Stone Energy Corporation is soliciting cash offers for its leasehold position in Wilkinson County, Mississippi. Stone has decided to make a strategic exit to focus its exploration and development efforts in other areas of the U.S. Stone currently owns approximately 45,569 gross and 19,240 net acres in Townships 2 North and 3 North, Ranges 1 East, 1 West, 2 West and 3 West.  The company has yet to announce the play or drill a well.
Rough outline of Stone Energy TMS lease area (yellow); TMS wells

Tuesday, July 24, 2012

Encana Earnings Call

Encana will hold their quarterly conference call tomorrow.  It will be interesting to see if they announce a partner in the TMS and updated drilling plans.
For details:

The call mostly presented "high level" corporate financials and the discussions were mainly focused on natural gas prices.  A summary of TMS related items:

·       Increase pace in oil plays

·       Made tremendous progress in evaluating new plays

·       Leverage joint ventures to accelerate development

·       Dataroom open for US liquid rich plays; expect bids in fall

Thursday, July 19, 2012

Goodrich Petroleum's TMS Acreage

The map below presents a rough depiction of Goodrich's acreage position as provided in their online corporate presentation.  Goodrich took a different approach from Encana, Devon, and EOG and scattered their blocks.  This might provide a "risk hedge" as the shale's rock properties will vary across the play.  According to their website, the company's position now totals 132,000 acres.  Their position is heavily weighted towards the updip oil window.
Goodrich acreage (green), active TMS wells, base of TMS structure, and TMS units (black); Acreage Source: Goodrich Petroleum's website.

Tuesday, July 17, 2012

Encana - Potential Future Drilling

In February, 2012 Encana released a TMS play map with potential future locations and their current acreage position.  In June at their Analysts Day, they updated their acreage map. The map below presents a rough depiction of their acreage around their potential future drilling locations.  A recent rumor in the field indicates that they have approved the clearing of twenty three new locations.  It appears that Encana will continue to be the leader in this play.
Encana acreage (blue) and potential future locations (red circles); Source: Encana online presentations (Feb/June 2012)

Monday, July 16, 2012

Who's Hot, Who's Not

The "Google Trends" technology provides the ability to observe trends in search and news volume regarding a specific topic.  A look at "shale mania" provides some interesting stories and trends.  The "shale granddaddy", the Barnett Shale, kicked the mania off in 2008.  Thank you George Mitchell and the Mitchell Energy team. Twenty years of hard work.  A great testament to the resilience and tenacity of this industry.

Based on the search volumes, plays like the Barnett and Haynesville present "boom and bust" patterns.  The Marcellus shows a gradual increase and a subsequent decline.  The Eagle Ford, the current darling of the industry, illustrates a nice steady rise.  Surprisingly, the Bakken has not seen similar volumes compared to other less successful plays.  The Tuscaloosa Marine Shale has yet to appear on the media radar (not enough searches to create a graph).  Our "little train that could" will be the talk of the industry in 2013.  We'll check back on this chart in a few months.

Surprisingly, shale gas has had more volume recently than shale oil. That's likely attributed to the anti-fracking articles relating to shale gas plays like the Marcellus and Utica in "oil unfriendly" states.

Google Trends: chronological search volumes

TMS Structure - A 3D View

The image below presents a three dimensional view of the Base of TMS Structure across central Louisiana and southern Mississippi.  With vertical exaggeration, the display illustrates the prominent geological features and the basinal aspect of the Tuscaloosa Fairway.  This view provides a perspective to compare the various drilling locations from the Texas state line to Hancock County, MS.

Three dimensional view of the Base of TMS Structure; Wells and major geological features added for reference; The well names are placed directly above the wellbore.

Thursday, July 12, 2012

Unit Definitions

One of the criteria determined in a unit hearing is the unit definition from a geologically perspective.  The unit will reference a nearby well and define the vertical stratigraphic interval to be considered part of the unit.  Comparing unit definitions across the play presents some interesting takeaways.  EOG has defined the interval to cover most of the Eutaw (Base of the Austin Chalk to base of the TMS).  It's also interesting to note that EOG used the same definition well for both of their units.  If one evaluates that well and its completion history, they might conclude that EOG has plans to test the middle to upper Eutaw in addition to the TMS.  I'm confident that EOG will leave no "stone unturned".

Unit definitions (Source: LA Office of Conservation)

Wednesday, July 11, 2012

Devon Permits A Long Lateral

Devon Energy has permitted the Weyerhaeuser 72H-1 in St. Helena Parish.
API: 1709120151    Serial: 245147   Location: 72-1S-4E
MD: 21160   TVD: 12960

This will be one to watch.

EOG Spuds the Dupuy Land Co. #1

EOG spud the Dupuy Land Co. #1 today.  The commencement of their TMS drilling program has been much anticipated.  On 6/22/12, the permit was revised for a total depth of 12,500'.  Assuming that this well is still a vertical pilot hole, that total depth places the bottom of the wellbore at an estimated 820' below the base of the Tuscaloosa Marine Shale.  That's a lot of "rat hole".  That would place the TD an estimated 600' into the Lower Cretaceous carbonates.  Might EOG be examining these carbonates for fractures along the structural nose (LaSalle Arch)?  This could be an interesting development.  The Lower Cretaceous is virtually unexplored over this entire region.

Structural Cross Section; Avoyelles Parish, LA

Initial Potential Metrics

I've updated the charts below with the Devon Weyerhaeuser 14H-1 result.  As we continue to add more datapoints, the trend line will become more of a forward looking prediction tool.  The points above the line "under performed" the group while those below the line "over performed" based on a comparison to the trend line. 

Monday, July 9, 2012

Devon IP's the Weyerhaeuser 14H-1

Devon has released the initial potential for the Weyerhaeuser 14H-1 on SONRIS.
COMPLETED 6/25/12 AS A OIL WELL IN THE T M S RA SUA RES;PM F 384 BOPD; 35 MCFD; 3190 CP FTP; 10/64 CK 408 BWPD; 1.06%BS&W; 91 GOR ; 40 GRVTY PERFS 12920-18653' (ST: 10)

My understanding is that 20 frac stages were performed with one screenout.  The perfs span 5733'.  Encana's Weyerhaeuser 73H-1 (2 miles northwest) had an initial potential of 784 bopd and 309 mcfgd from 17 stages.
I will present some comparables later this week.

Sunday, July 8, 2012

Frenzy On The Fringes

Over the past few months, there's been a leasing frenzy on the "fringes" of the higher resistivity area in the TMS Play.  The second phase of leasing has included several newcomers whose only option for large tract leasing was to go either updip or out west into Rapides Parish (Halcon). Other existing players like Goodrich and Encana have added large contiguous tracts out on the fringe of the higher resistivity area.  Several new players have acquired tracts up in the 3N and 4N townships.

The Encana Joe Jackson 4H #2 has experienced significant hole issues while attempting to drill the lateral.  It has been reported that the well was terminated after only reaching a 2500' lateral length.  Sloughing shale due to high clay content might be the issue.  The TMS occurs at -11400' TVD-SS in this wellbore.  It has been reported that Goodrich has been very challenged for similar reasons while building their curve in the Denkmann 33H-1.

Due to high costs, the current operators are wise in conducting the "R&D" drilling and completion efforts in the shallower section.  The Phase II lessees leased large tracts updip because that was what remained available to lease.  The geological facies might indicate that going updip to the north moves closer to the clay-rich prodelta facies and will present drilling and completion challenges.  While shallower and cheaper, time will tell if this location presents economically viable reservoir rock. 

I recommend heading south towards the marine facies (calcite-rich Pilot Lime).

TMS deltaic facies cross-section; Deltaic facies and grain size models.

TMS facies and lithologic model.


Wednesday, July 4, 2012

Happy 4th of July

Happy 4th of July to all! Enjoy a great day with family and friends.  Celebrate and appreciate your freedom.!

Monday, July 2, 2012

Halcon Announces The TMS

Halcon has officially announced their entry into the TMS.
"The Company has identified the Tuscaloosa Marine Shale formation as one of its four previously undisclosed liquids-rich exploratory plays. Halcon anticipates building a position of 150,000 to 200,000 net acres across the trend and expects to utilize one rig to spud three to five wells in the second half of 2012 with 100% working interest. The Company plans to spud its first well in the trend in July."

The company has been aggressively leasing across Rapides Parish paying top price and royalty.

Press Release:

Contango Enters The TMS

It appears that another Gulf of Mexico player as come onshore.  Contango Oil & Gas Company has announced a lease position in the TMS.

"In addition to our planned activities in the Gulf of Mexico, we have invested approximately $5 million to lease approximately 14,000 acres in the Tuscaloosa Marine Shale ("TMS"), a shale play in Louisiana and Mississippi, with an option to purchase approximately 10,000 additional acres. The TMS is an oil focused play and we intend to watch the play develop before we commit to drilling any exploratory wells."

Contango's recorded leases are in Concordia, Avoyelles, and W. Feliciana Parishes.

Press Release:

TMS Completions: GOR vs TVD

The chart below depicts the Gas/Oil Ratio versus the true vertical depth of the wells.