Enverus Blog

Insights across the energy value chain

It was another busy month over on the Unconventional Reservoirs Blog. As usual, we covered a lot of ground. From tried and true plays like the Eagle Ford and Bakken, to newcomers like the SCOOP, there was plenty to discuss and dissect.

If you haven’t had the chance or the time to read all of the posts yet, here is a brief overview of 5 unconventional plays we highlighted in October:

    1. SCOOP: The artist formerly known as the Woodford Shale made headlines this month, as Continental Resources announced their Anadarko Woodford discovery. The South Central Oklahoma Oil Province, or SCOOP, is similar to the Bakken, Marcellus and Eagle Ford Shales. If estimates are accurate, the play could add 1.8 billion boe to Continental’s reserves in the next few years. So far, the company has drilled or participated in 35 wells and de-risked over 600 square miles. SCOOP wells cost about $8.5 to $9 million to complete, while condensate wells cost around $9 to $9.5 million. Continental expects costs to come down as more Bakken strategies are applied to the play. The company drilled its first extended lateral and has plans for more in 2013. Click here to read the full article.
    1. Utica: Eastern Ohio hasn’t seen growth in decades, but with rising activity in the Utica shale, small towns that were struggling with tight budgets are feeling revitalized. Thankfully, it doesn’t sound like the growth is going to stop soon. The USGS recently reported the Utica holds an estimated 38 Tcf of undiscovered, technically recoverable natural gas. The formation also contains an estimated 940 million bbl of unconventional oil resources and 9 million bbl of natural gas liquids. Looking at the size of the 15 million-acre section of rock that spans Ohio, New York, Pennsylvania, West Virginia, Virginia and Maryland, the agency concluded it was is the “longest producing petroleum province” in the country. The play is creating positive economic repercussions throughout the Midwest. DTE Energy, Enbridge Inc. and Spectra Energy Corporation announced they agreed to a $1.2 billion plan to develop the NEXUS Gas Transmission (NGT). It will move growing supplies of Ohio Utica gas to markets in the Midwest. Click here to read the full article.

This Month in Unconventionals – October 2012

    1. Fayettville: A small group of landowners in Conway, Faulkner, and Independence counties have asked a federal court to allow a class action lawsuit against Southwestern (SEECO), Chesapeake and XTO (ExxonMobil). The landowners claim the companies are illegally operating six wastewater injection wells. Petitioners want $2 million in compensatory damages per plaintiff, and $15 million in punitive damages per plaintiff. A spokesperson for Southwestern Energy stated the company reuses 90 to 95% of flowback water from hydraulic fracturing, and that the small remainder is sent to injection wells for disposal. They also stated, “[Our] underground injection wells are designed, constructed and operated to comply with all applicable laws and our own best practices to ensure the wastewater is safely injected into the approved disposal zone. In addition, we have signed agreements that specifically give us permission to conduct the disposal activities described in the lawsuit.” It will be interesting to see how this story develops.

This Month in Unconventionals – October 2012

  • Eagle Ford: Sanchez has been the fast growing independent E&P company in the South Texas region for many years, but their Eagle Ford drilling operations are about to go into overdrive. The company recently closed the private placement of $150 million of its 4.875% Cumulative Perpetual Convertible Preferred Stock. This includes $25 million from the exercise of the initial purchaser’s overallotment option. Net proceeds from the offering were roughly $144.6 million, including the exercised overallotment option. These proceeds will go towards the advancement of the company’s capital expenditures. In the Maverick region, the company is largely de-risked. Initially, their 2012 drilling plan was to drill 5 net wells. But given the additional funding, Sanchez plans to drill 2 vertical and 8 horizontal wells over the course of the next year. The company has 235 to 350 net locations with 60 to 90 MMBOE of net resource potential using 120 to 80 acre spacing. I’m eager to see how things shake out for Sanchez in the coming months. Click here to read the full article.
    This Month in Unconventionals – October 2012

 

    1. Bakken: Halcon Resources Corporation announced it entered into a privately negotiated definitive agreement with Petro-Hunt, LLC. The $1.45 billion deal, consisted of $700 million in cash and $750 million in equity to acquire producing and undeveloped assets in the Williston Basin. The assets make up 81,000 net acres (95% operated), a net production average in excess of 10,500 Boe/d and total proved reserves of 42.4 MMBoe (88% oil). Internal resource estimates give a potential of more than 100 MMBoe. There are five operating rigs currently drilling these properties. Halcon has over 135,000 net acres in the Williston Basin and a company-wide current average net production of about 26,500 Boe/d. The effective date of the transaction was June 1, 2012 and is expected to close in December 2012. Below is a look at Petro-Hunt’s Bakken/Three Forks acreage Halcon is acquiring. Given the level of attention on the Bakken these days, all eyes are on Halcon to see what kind of production they can get from the acreage.

This Month in Unconventionals – October 2012

Alright, that covers things for This Month in Unconventionals. If you would like to read detailed commentaries as they are published, please visit blog.

Now it’s your turn. What do you think was the most exciting development in unconventionals this month? Leave a comment below.

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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.