Thursday, August 30, 2012

IP vs IP30

Many have asked me to compare the IP vs IP30 rates in BOEPD.  Here's a comparison showing the % difference from the boepd of the IP30 to the IP.  The higher % means that the IP30 was higher. The wells are in chronological order.
Encana: 61%, -17%, 1%, -10%
Devon: -61%, 74%, 11%, 42%

No real trend.  Of note is that the IP30 of Devon's last three wells was greater than the IP.

IP (Initial Potential): the initial flow rate of the well; typically 24-72 hours.
IP30 (Initial Potential 1st 30 Days): the operator of the well will have this information but report monthly totals to the regulatory agency; The first full month of production is used for the IP30 unless the operator releases it.  In Mississippi, the amount of days on production are reported.  In Louisiana, they are not, so a full month is assumed.

Tuesday, August 28, 2012

Devon Releases The Murphy 63H-1 IP

Devon's initial potential for the Murphy 63H-1 was released on SONRIS today:
COMPLETED 8/20/12 AS A OIL WELL IN THE T MS RA SUA RES;PM F 408 BOPD; 301 MCFD; 2875 FTP; 11/64 CK; 504 BWPD; 1.23%BS&W; 738 GOR; 43 GRVTY PERFS 14428-19170 (ST: 10)

That equates to 460 boepd which is less than I expected.  Keep in mind that on the Weyerhaeuser 14H-1 well, Devon's IP was well below the IP 30 rate.  The frac job details have not been released so the amount of proppant per stage is unknown.  I've heard that they performed 19 stages.  Based on 19 stages, the initial potential equates to 24 boepd per stage.  The Encana Anderson 18H-1 for comparison was 37 boepd per stage and the 17H-1 was 31 boepd per stage.  The GOR of 738 is high which was expected with the greater depth. 

On July 27, I provided some predictions for this well:

At that time, I was told that 16 stages were planned.  With 19 stages, the "IP vs Stages" chart would indicate an estimated IP of 580 boepd.  The 30 day IP will be interesting to see.

TMS Completions
The IP for the Murphy 63H-1 plots directly on the "best fit line" for IP's.
TMS IP's vs IP30's (Source: SONRIS, MSOGB, Company presentations)

Word "on the ground" is that Devon is very pleased with the result and likes the rock properties. That's consistent with my geological assessment of the area. Stay tuned.

Saturday, August 25, 2012

Tuscaloosa Trend Expands To Twitter

The Tuscaloosa Trend blog has expanded to the world of Twitter.  This will provide an arena for two-way communication regarding TMS topics.  Join up. It's easy.

Wednesday, August 22, 2012

Encana Joe Jackson 4H-2 Update

From what I hear, Encana commenced the frac job on the JJ 4H-2 today.  The well had significant issues during the drilling of the lateral and the horizontal length achieved was sub-2500'.  I hear that only 5 stages are planned for the job.

Monday, August 20, 2012

Summer NAPE - Amelia Resources Booth 2013

Amelia Resources will have a booth at Summer NAPE this week in Houston.  Stop by and share some ideas regarding the TMS.

Devon Murphy 63H-1 Update

Word out "in the field" is that the well started to flow back today.  Flow rate rumors should be coming soon.

Wednesday, August 15, 2012

Halcon Enercom Presentation

Halcon Resources presented at the Enercom Conference on 8/14/12.

The slide below states 140,000 net acres which is 90,000 additional acres then they released in their recent conference all.  I believe that the 90,000 acres are anticipated additions.  The spacing of 160 acres is intriguing.  The current average unit size is 1000 acres.  The gross EUR of 569 MBO is within the range of what other companies have released recently.

The slide below states that they've leased 30% of their target acreage amount.  In the EUR, the oil represents 65% of the reserves.  The IRR's look low compared to other shale plays.

The slide below represents a structure map on the base of the TMS.  The lack of existing well control illustrates that this area is more "wildcat-ish" than the TMS-East.  The map presents 2D seismic lines that would be the basis for the structural nosing across the map.  Note the 2nd well location.

Based on the thicknesses on the map, this appears to be a gross interval isopach of the entire Eutaw section.  Due to minimum amount of well control, I assume that this map is mostly controlled by their 2D seismic grid.

It's rare to see a company state their "progress" in leasing as a percentage along with their maps.  The competing speculators have to like that.

Entire presentation:

Monday, August 13, 2012

EOG Gauthier #1 - Rig Arrives

H&P Rig #417 on the EOG Gauthier #1 (Photographer: Tim Bordelon)
H&P rig #417 has arrived at the EOG Gauthier #1 location.  This will be another vertical pilot hole.  I would expect conventional core to be taken in the TMS in this well also.

Devon Murphy 63H-1 Update

Photo taken by the Tuscaloosa Trend Drone.
From what I understand, Devon completed 19 stages on the Murphy 63H-1 yesterday.  Lets hope for a great initial rate. I have a real good feeling about this one.

Tuesday, August 7, 2012

EOG Dupuy #1 Update

SONRIS reports that EOG starting coring at 11440'.  Based on my correlations, that's 215' above the base of the TMS.  The well was re-permitted to 12500', but SONRIS states 11950' as the total depth.  That should put the bottom of the wellbore 125' below the Tuscaloosa sands. 
Stratigraphic cross section (datum: Base of TMS)

Monday, August 6, 2012

Goodrich Provides A TMS Update

Goodrich's update:

"For the quarter, the Company spent approximately $54.3 million, or 73% of its capital, in the Eagle Ford Shale Trend where we had 2 – 3 rigs running during the quarter, and $17.5 million, or 24%, in the Tuscaloosa Marine Shale Trend, for a total of $71.9 million, or 97%, of its total capital on oil-directed activity. Of the $17.5 million spent in the Tuscaloosa Marine Shale Trend, approximately $12.8 million was spent on leasehold, which was included in the Company's previously disclosed $27.5 million leasehold and infrastructure budget."

"The Company expects its 2012 capital expenditures to be approximately $250.0 million, which includes an increase in the number of wells drilled and completed and capital allocated to the Tuscaloosa Marine Shale by approximately $20.0 million, offset by a reduction in capital expenditures of approximately $25.0 million previously allocated to the Angelina River Trend and Eagle Ford Shale Trend, with 5 gross (3 net) fewer Eagle Ford Shale Trend wells completed than previously estimated."

"The Company is currently drilling its first operated well, the Denkmann 33 H-1(75% WI), with completion scheduled within 30 days, to be followed by the Crosby 12H-1 (75% WI). The Company has participated in a non-operated well, the Joe Jackson 4H-2 (25% WI), which is scheduled to be fracked in August, and will be participating in two additional non-operated wells, the Ash 31 H-1 (20% WI) and Ash 31 H-2 (20% WI) during the second half of the year. With the success we have experienced to date, the Company anticipates moving a second rig into the TMS from the Eagle Ford Shale in the second half of the year, with the possibility of running 2 – 3 operated rigs in the TMS in 2013."


Friday, August 3, 2012

Halcon Permits Their First TMS Well

Halcon Resources has permitted their first Tuscaloosa Marine Shale well. The company hasn't wasted any time getting into the play.  Yesterday they announced that they have 50,000 acres leased with 200,000 as their goal.  The company has been focused mostly in Rapides Parish, LA.  Rumor has it that geologist Gregg Robertson, who led Petrohawk into the Eagle Ford, is leading the technical team.  Halcon, Spanish for "hawk", might just be Petrohawk II.  Same CEO.  Same stock symbol.  Same office building. Maybe the same technical team come 11/6/12.  Might be time to check out this stock (NYSE: HK).  I digress.

Their efforts in the TMS have been focused in the lower resistive area of the play.  Rumor has it that their technical team believes that the Tuscaloosa sands in the TMS-East region are a frac risk.  Success in this area could ignite the TMS-West region.  To date, Indigo Minerals has drilled the only horizontal TMS well on this side.  Success in Rapides Parish could greatly enhance the Indigo acreage block.

The Broadway #1 location is in an area with very few vertical TMS penetrations which make this well a true TMS wildcat.  Their permit has 14500' as TVD with a 5000' lateral planned.  My estimation for the base of the TMS is -13100 TVD-SS.
Base of TMS Structure; LK Shelf Edge (blue); Higher resistivity boundary (blue dash); Rumored Halcon acreage buy areas (red)
Stratigraphic cross section displaying Passey crossover; Blue numbers: Top - Feet of pay (delta-log-R>0.9), Bottom - average Delta-Log-R.

Stratigraphic cross section

Halcon's Earnings Call

Halcon was brief with regards to the TMS:
"In the recent call, in the recent press release we unveiled our entry into the Tuscaloosa Marine Shale play and disclosed our intent to acquire up to 200,000 acres. We have well over 50,000 acres in this play so far and we will spud our first well there this quarter."

EOG's Earnings Call

EOG didn't say much about the TMS.  A summary of TMS related discussion:
Robert S. Morris - Citigroup Inc, Research Division
When you mentioned potentially doing a JV in another oil play, I assume that's separate from the JV you did with Mitsubishi in the Tuscaloosa Marine Shale and is a play that you've not disclosed or talked about yet.

Mark G. Papa
Yes. Don't try and pin us down too much. We're really -- what you ought to take directionally out of that is our inventory out of our big 4 plays and our success rate there is so high that we could easily push essentially all of our cash flow into those plays next year. And so in any of our other oil plays, horizontal oil plays, we may elect to push our capital away from those and use JVs and allow us to funnel more money, particularly in the high rate of return in the Eagle Ford. So that's kind of the thinking behind what we're talking about.

Robert S. Morris - Citigroup Inc, Research Division
Okay. And then on the joint venture with Mitsubishi in the Tuscaloosa Marine Shale, what has been your activity under that joint venture to date?

Mark G. Papa
Yes. Well, currently, we've commenced drilling, and probably, by year end, we'll have first wells results on there. So I guess on the February earnings call, we'll know something from the first well.

Wednesday, August 1, 2012

Devon Earnings Call: TMS Highlights

Devon's TMS commentary was brief, but positive this morning:
" In the Tuscaloosa Marine Shale, we drilled our first 3 wells in the northern portion of our acreage position. The Richman Farms 74H located in East Feliciana parish was brought online in the second quarter with an average 30-day IP rate of just shy of 300 barrels of oil per day. Now our next well, we've landed the lateral in a more optimal position and we saw significant improvement in rate. After 20 days of production, the Weyerhaeuser 14H, in St. Helena Parish has averaged 670 barrels of oil per day from a 5,700-foot lateral. Our third well in the area, the Murphy 63H in West Feliciana Parish, a 4,700-foot lateral, is slated to begin the completion operations early next week. We plan to drill our future Tuscaloosa wells with 8,000-foot laterals. We expect this trend of improving performance to continue as we make additional improvements to our drilling incompletions. Reducing costs and improving well performance over time are keys to making this play economic going forward."

I expect Devon's results to improve as they shift their focus to some of their deeper acreage.

Play Comparison: Peak Month - Average BOEPD - Updated

I've updated the chart below with Devon's rates that were announced today in their earnings call.  The TMS appears to "be in the hunt".
Play Comparison; Eagle Ford and Bakken averages sourced from IHS; TMS averages sourced from SONRIS and operator presentations.

TMS Monthly Decline Rates

The monthly percent declines in oil production are displayed in the chart below.  It indicates that production starts to stabilize around 4-5 months.