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Some Operator Notes: ECA, GMXR, QEP


Here are some E&P notes from the 2Q Earnings reports that may be helpful to some of you guys.  I noticed many Haynesville operators discussing that they have not been feeling drilling and completion cost pressures in the Haynesville lately.  Dry gas is not exactly in favor, especially not $9.5MM per well dry gas such as the Haynesville.  The name of the game has been program ramp-downs and drilling efficiences.  

EnCana Corporation (ECA)

-Averaged 487 MMcf/D in 2Q 2011, up 89% from the 2Q 2010.  ECA plans to average 505 MMcf/D at YE 2011 and > 1 Bcf/D at YE 2015.

-ECA drilled 23 wells in the 2Q and 45 wells in the first half of 2011.  ECA will drill 86 net wells in 2011.

-Plans to drill a total of 85 net wells by year end, holds 350k net acres.

-Operating 11 rigs and participating in 9 non-operated rigs.  Significant JV with Shell.

-Drilling cycle times are down over 20% year-over-year, in large part due to hub development.

-Hub design can reach efficiencies of 40 days spud to rig release, 50% gains in frac stages per crew per month

-ECA obtained regulatory approval for first Louisiana cross-unit alternate unit wells which allows for the drilling of 7,500’ laterals spanning blocks of 3 sections.  Future plans call for 10,000’ laterals.

-Guidance set at 505 MMcfe/D at YE 2011

-ECA will continue to delineate Bossier Shale, holds 150k-200k acres.

-Haynesville NGIP: 175-225 Bcf / section.   Mid Bossier Shale NGIP: 100-200 Bcf / section

QEP Resources (QEP)

-16 completed wells from 1Q2011 earnings call to 2Q2011 earnings call

-Not affected by rising well costs

-D&C $9.1MM/well in 2011, down from $9.3 MM last year

-Lacks one section until Haynesville is HBP, company estimates that 6 rigs will be an appropriate level thereafter

-Strong proponent of restricted rates, the practice helps maintain reservoir integrity and curtails sale of cheap gas

GMX Resources (GMXR)

-25,224 net core HA/BS acres

-During the 2Q 2011, GMXR completed 3 long lateral Haynesville / Bossier wells (~6,500’)

-The long laterals fall in line with previous EUR guidance of 6.5 Bcf / well

-GMXR will suspend Haynesville drilling due to depressed gas prices and lack of significant service cost reduction.  The company’s 8th and final well of 2011 will be completed in the 3Q.

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