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EOG And Others Scale Back Haynesville Operations


EOG is sharing the same sentiment as most of the industry regarding dry gas.  Newfield Exploration sums it up well, “There will be a better time to develop natural gas.”. Many companies with large positions in liquids rich plays and the Haynesville are working toward drilling up their Haynesville acreage to HBP, then moving the rigs to the liquids.

Petrohawk has been very clear that they do not want to give up their world class Haynesville position because the gas prices are in a downturn.  Therefore Petrohawk will walk the line to HBP the acreage.  EOG will scale down their 2011-2012 development plan while at the same time, drill to hold their sweet spot acreage.  EOG is concentrated in two sweet spots, one in the SW extension in TX, and the other in the LA sweetspot.

Below is a slide from the EOG November Investor Presentation.  It outlines where their current rigs are, and the extent of their acreage.


Using HPDI Production Tools, I generated an overall Haynesville Production chart and an EOG Haynesville Production chart and posted them below.  Both charts show significant 2009 production ramp ups, followed by ramp ups in 2010 but on a smaller scale.  It is interesting as we follow the production levels in not only the Haynesville dry gas, but also the Woodford, Barnett and Fayetteville.

One setback in Haynesville drilling is the extremely high CAPEX required to drill the wells.  Earlier this year, I was hearing Haynesville well costs dropping to about $8MM, whereas now with the severe increase in frac crew scarcity and cost, I imagine they will be creeping back up to the $8.5-$9MM range especially in the deeper areas of the Shelby extension in TX.

We will continue keeping tabs on Haynesville activity at this blog as well as the Haynesville Unconventional Update available to all DI subscribers.

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