Enverus Blog

Insights across the energy value chain

I-10 stretches a staggering 877 miles across Texas, encountering countless different cities, speed limits, potholes, and restaurants along the way. In the GLO’s recent offering of over 115k net acres across 335 tracts across the state, the vast expanse of Texas’ mineral wealth comes into focus. The acreage is scattered across 20 different counties meaning companies of every scale will be looking at it.

Region Notes

  • Permian Basin headlines the marketing sheet for this offering
    • With acreage scattered through Reeves, Culbertson, and Pecos this deal has a decided Delaware lean. The Reeves and Pecos Acreage is bracketed by Chevron and Centennial’s acreage serving to ignite higher bidding with the recent acreage swaps and sales in the area by the two drawing more eyes. Centennial’s latest 8,600 net acre sale came out to $16,400 per acre, closing this month, shows interest in the area.
    • South Culberson tracts draw the most intrigue (read: speculative) with a 2014 State sale to John Wollcott hugging the Apache acreage on the border of Culberson and Reeves. Apache currently has 2 rigs running just over the border with 7.5 miles of the closest offered GLO tract. While there has been a well that came on very modestly to the south of the offered acreage, it was brought on 10 years ago and currently there is no recent production around the tracts. Apache continues to permit clusters of 16000 ft permitted wells on the SE to NW trend, extending just over the county line. They have dubbed this area their ‘Northern Flank’ and with well costs between $4-$6 million and EURs in the 2bcf+ range, their economics look great. These new wells are boasting a 2 year breakeven period and higher oil cuts come into play in the northern tracts.
GLO STATE LEASE AUCTION

In figure (Orange tracts are the offered land): Landtracs that have not expired are colored by expiration date. Note there are many expiring tracts coming up in the next 3 months. All rigs permits and production shown in Reeves county is tied to Apache.

GLO STATE LEASE AUCTION

GLO STATE LEASE AUCTION

Gas EUR Curve for recent Apache Well and Economics DCF

  • Haynesville/Cotton Valley
    • Tracts in Harrison and Rusk offset better recent production, but lack size at 37 and 4 acres respectively.
    • Marion county seems to be the jewel of this offering with Herd Production having a rig on location, drilling a wildcat, just to the North East of the 514 acre tract. Here the Cotton Valley has been de-risked in the southern offsets and this acreage sits in a nice 500-1,200 ft updip of the more core areas. The wildcat could offer upside drilling a shallower horizontal well permitted to 7000 ft.
  • Galveston Bay
    • Torrent and Linc serve as the two recent operators to drill in Galveston Bay, west of the offered blocks. Their efforts have largely targeted Frio and Miocene reservoirs to a standard measured depth around 7000 ft. Average EURs, for bay wells first produced in the last 5 years, are around 118k bbls and 63k mcf. The type curve indicates 3-4 years to breakeven and comes with the conventional disclaimer that well performance varies greatly.
    • Onshore, Hilcorp drilled the closest economic well, 12k+ ft down to the Vicksburg. Currently about 3 years into production, the EUR looks to be around 2 bcf with steady oil figures staying between 10k and 18k bbls a month during that time period. These figures hammer home a sub 12 month breakeven and spectacular returns. Again, this well is over 5 miles away from the nearest offered tract.

DETAILS

As more public lands come up for lease, the GLO is the latest to offer up acreage scattered across Texas with a good mix of conventional and unconventional acreage. Currently marketed on EnergyNet, prominent shale counties are listed as the main draw for this offering but there are other offerings that are high traffic areas. With New Mexico’s latest 2100 acre offering taking place last month, Texas is looking to improve on the $1,000 per acre mark of their neighbor to the West … smart money is that they will!

GLO STATE LEASE AUCTION

All activity and charted values filtered to a 5 mile buffer zone drawn around offered acreage (red polygons). Culberson leads the way with highest peak rates in the buffer zones, but Reeves leads in leasing and permitting activity. Offered tracts are outlined by blue ovals denoting a 5 mile buffer.. The Heat map above shows statewide leasing activity in the last 90 days where darker red is more activity and green is less.

GLO STATE LEASE AUCTION

First production occurred in Last 5 Years, bubbled by the highest month of production in a barrels of oil equivalent. Offered tracts outlined in Red.

GLO STATE LEASE AUCTION

First production occurred in Last 5 Years, bubbled by the highest month of production in a barrels of oil equivalent. Offered tracts outlined in Red.

GLO STATE LEASE AUCTION

Strong Wolfcamp A and B production along the Reeves/Loving border shows stacked potential. DI Landing zones are driven by a DI geologist-picked earth model and using directional survey data to diagram which bench the majority of that lateral fell in. Offered tract outlined in Red.

GLO STATE LEASE AUCTION

Two offset rigs running and strong Wolfcamp A production is complimented by one disappointing Wolfcamp C well and one moderate Wolfcamp C producer. Colored by DI Landing Zone, bubbled by the highest month of production in a barrels of oil equivalent. Offered tracts outlined in Red.

GLO STATE LEASE AUCTION

Reeves County, south of Pecos. Bubbled by the highest month of production in a barrels of oil equivalent. Offered tract outlined in Red.

GLO STATE LEASE AUCTION

GLO STATE LEASE AUCTION

Larger Red well is a 2008 vertical gas well that has been recompleted twice, permitted deep 12k ft. State reported as a ‘Shale’ target. All other smaller circles are historic, inactive wells.

GLO STATE LEASE AUCTION

Wells colored by state reported reservoir and sized by highest month of production in a barrels of oil equivalent.

GLO STATE LEASE AUCTION

Galveston Bay offering in Red Outline, Circles with white centers denote recent leasing and are colored by Grantee. Production in bay is largely Miocene or Frio; production bubbled for wells that first produced in the last 12 months. Linc and Torrent are the bubbles closest to La Porte and represent the only offshore wells brought on in last 5 years.

GLO STATE LEASE AUCTION

Heat map shows Lease activity in the last 90 days where darker red is more activity and green is less.

 

 

 

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Scott Iceton

Scott Iceton is the Manager of Technical Advisors at Drillinginfo. Since joining the company in 2011, Scott has worked with over 2,500 companies on Geosciences, Engineering, and Land workflows. He has been a part of technical support, sales, and training, and now works closely with clients and the products teams at Drillinginfo. Scott graduated from the University of Texas and earned his Petroleum Land Management certification from University of Houston - Downtown.