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Barnett Showing Some Gray Yet Still Providing Opportunity


Operators staying true to the play believe the Barnett will hold out another 10 to 20 years.  The rig count has dropped by almost half over the past year, but that’s indicative of low natural gas prices.  Here’s a look at the latest rig count in the Fort Worth Basin.  Chart includes 5 vertical rigs.


Those with good acreage positions in the Barnett Shale Combo; the play offers nice liquids revenue growth.  EOG, the largest oil producer in the Barnett, has amassed 215,000 net acres in the core combo area.  A typical well for the company, priced at $3.3 MM, has an EUR of 300 MBOE and around a 40% after tax rate of return.  EOG plans to complete 200 net wells in the play this year.  Pioneer is still increasing production and plans to continue that trend on into 2014.  The company has 80,000 gross acres prospective to the core and is currently running 2 rigs with plans to ramp that up to 4 next year.  Well costs for Pioneer are around $3.5 MM with a 5000 foot lateral and gross EURs of 460 MBOE.  Devon is making the most of their position and plans to drill 300 net wells this year and has reported 30% of production in the play is liquids, including NGLs.  According to Ron Gajdica, SVP Enervest Energy Partners, LP, the combo area has a lower decline rate than the rest of the Barnett.  There is little geologic risk, but uncertainty about what the IPs will bring.

Permitting over the past 3 months shows EOG and Pioneer providing the bulk of the activity in Montague and Wise Counties.

As for the rest of the Barnett, it’s the same old song and tune coming out of the other shale gas plays.  Last year, Range Resources sold their Barnett assets for $900 million to a private company, but holding onto some nonproducing acreage valued at about $50 million.  A couple months ago Chesapeake laid-off roughly 10% of their workforce in the region and has drawn back to 2 rigs, down from 44 rigs in 2008.  Both Carrizo and Quicksilver are in the final stages of reconfiguring their positions by creating MLPs and selling off acreage.  Carrizo sold a portion of their assets to Atlas Resource Partners, a newly formed E&P MLP of Atlas Energy for $190 million, which closed in late April.  Quicksilver, with an inventory of uncompleted wells, has decreased their leasehold to 160,000 acres down from 200,000.

At 30 years of production, the Barnett is debatably middle-aged.  For some it continues to be a significant liquids growth contributor, while others see the play in its twilight.  Stay connected with the Barnett Shale by logging on to Drilling Info’s DNA section.

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