Enverus Blog

Insights across the energy value chain

Yesterday Forest Oil Corporation announced that they were selling South Texas properties.  The company didn’t give too much detail on the subject other than it has entered into a definitive agreement to sell all of its properties in South Texas, excluding Eagle Ford Shale oil properties, for after-tax proceeds of $375 million to an undisclosed buyer.  The properties produced 66 MMcfe/d (86% natural gas) in the third quarter last year.  As of December 31, 2011 estimated proved reserves were 272 Bcfe (85% natural gas) and generated roughly $60 million of lease level income in 2012.

Digging a little deeper, I knew that Forest has a decent sized position in the Eagle Ford, but I wanted to get a better idea of their asset portfolio down in South Texas.  Where are their wells, where are their leases, and is there anything in this divestiture that could be prospective to the condensate or dry gas windows of the Eagle Ford?  In order to get an accurate picture of all their properties, I used DI Desktop and Drillinginfo to create shapefiles of all of Forest’s currently producing wells in South Texas and all leases filed in the past 3 years then plugged it into QGIS software.

 

Come to find out, Forest does not have any property in the other windows of the Eagle Ford Shale.  So this was sort of a disappointing discovery.  However, the company has amassed a plethora of gas wells in deep, southern Texas targeting various reservoirs over the past fifteen years or so.  These conventional wells are what are on the table for divestment.  So it appears Forest is trimming some fat and using these funds to pay down some debt.  This makes for a wise business decision, but not so much for an exciting unconventionals A&D blog.  I’m looking forward to Forest’s Eagle Ford drilling plans in 2013.  As of September 30, 2012 Forest has 91,000 net acres in the play and 40,000 net in the central fairway of Gonzales County.  Forest is using the rig walking system for multi-well pad drilling, where a four-well pad can be drilled in 65 days compared to four single-well sites which can take about 84 days, according to a recent corporate presentation.  Completed well costs have been reduced by 8-15% to $5.5 – $6.0 million, versus a single-well approach.  So enhancing well economics is a huge focus in their developmental stage.

Keep track of other Eagle Ford operators and activity in the DNA folder repository of Drillinginfo. DNA is open to all Drillinginfo account members.

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Matt Menchaca

Matthew Menchaca is a Research Analyst at Drillinginfo. He is a key member of the Data Management Department and the DI Analytics group. He performs industry research, tracks play development and provides various types of analysis on unconventional resource plays in the U.S. Matthew graduated from the University of Texas at Austin in 2010 after studying Geography and Geological Sciences.