Wednesday, January 29, 2014

Current Activity

This latest "completion lull" should soon be coming to an end.  Results for the wells below should be announced in the weeks ahead.

Thursday, January 16, 2014

BMO Capital Conference - Goodrich Interview

TMS Summary from Rob Turnham's interview:
-spreading wells out to delineate to determine variability in results; consistent frac designs have produced consistent results
-two rigs now, scaling to five rigs by the 3rd quarter
-we know the oil is in place
-now have wells producing for up to two years, attractive decline curves; hyperbolic curve
-not seeing the sloughing issues during drilling as seen in the original wells; drilling high pressure and naturally fractured rock
-completions: wells frac easily; struggling with drilling out plugs due to high pressure and that the reservoir wants to flow on you due to natural fractures; have made changes that will have a material difference on the completion side
-rates of return are compelling at current costs; close to the Eagle Ford and opportunity to improve rates of return; still very early in this play; making great progress
-2014 drilling: budget for 20+ wells; drilling to date has been in northern portion; have completion recipe nailed down;subtle differences in the rock; gradually will work east and west with locations; gradually work south; 60% on former Devon acreage, 40% in Mississippi
-Acreage: will hold 20,000 net acres by end of year; 241,000 net acres have continuous drilling and extension options; $34M of capital over 3.5-4 years; great lease terms; concentrate in core and work way out; 
-Weyerhaeuser 51H-1: frac this week; landed lateral below the rubble zone; all of the conventional core indicate subtle geological differences across the play; the Crosby had the highest clay percentage; has produced 155,000 BOE in 10.5 months; the resource is clearly there; low expandable clay percentage; nothing concerning about the clay; Weyerhaeuser area has the highest quartz, lowest clay, and highest TOC compared to other conventional cores; ranks at top of the list; Frac: 23 stages over 6250'; can stimulate the zone landing above or below the rubble zone; wells that landed below have been the better wells; more quartz; 51H-1 landed in similar zone as Crosby 12H-1; slickwater creates fracture complexity; narrow frac intervals for better stimulation; 
-Huff: 17 stages; flowing the well back, similar pressures and fluid rates; event occurred indicative of a frac plug plugging off; tracing each frac stage at the surface; each stage has it's own signature; after the event only a couple of stages were producing; we knew right where the plug-off occurred; used dissolvable balls to go with the plugs; may have started flow back too early; need to let it sit and make sure the balls are fully liquified; likely created a sand plug behind it; rig on location cleaning the well out; expect to be completed soon and will start flowback; timing will align with the Weyerhaeuser 51H-1; results will be forthcoming in early February press release; 
-Costs/Economics: current $13M; getting LLS minus $2 at the well; lower royalty burdens 18.5%; no severance tax until payout; frac costs $20k/stage cheaper in 2014; equates to $1M savings; service costs declining with increased activity; 40-60 wells potentially drilled in 2014 by all operators; hitting most wells between mid to high EUR curve; returns double when dropping from $13M to $10M. Each day saved of drilling is $100,000. Pad drilling will be beneficial. Have seen these expense decreases in the Eagle Ford.
-JV with Sinopec; they have expressed an interest in the original Goodrich acreage; will have further discussions; need to get more wells completed before discussions continue; at $5000/acre that's $200M net to our interest; not interested in anything less than $5000/acre; to hold 300,000 net acres, at 1000 acres per well, that's 3 billion in capital to hold the acreage; will bring in additional capital or a partner; not urgent in 2014; we'll never be able to drill out 300,000 acres, that's probably in the hands of somebody much better capitalized sometime in the future


Wednesday, January 15, 2014

Sanchez Provides Update

Sanchez Energy released this update today:

We are not forecasting any material production from our step-out activities in Tuscaloosa Marine Shale ("TMS") this year, however, we remain excited about the potential that could start to be developed in the TMS. "We plan to initiate our drilling activities in the TMS in 2014 and have allocated approximately 10% of our operating capital to this rapidly emerging play. Our drilling will be a combination of operated and non-operated wells, with our first operated well expected to spud in the first half of 2014. We expect the substantial increase in TMS industry activity during 2014 to positively influence the well cost structure and overall knowledge of the play."