Barnett Shale

Quicksilver Resources - Barnett Shale Update

Quicksilver Resources Inc. (KWK) issued an operations update on its Barnett Shale activities. The company continues to develop its projects at Alliance and Lake Arlington in the Fort Worth Basin of the Barnett Shale.

Alliance Project

Quicksilver Resources is currently producing 71 million cubic feet (MMcf) per day of natural gas at its Alliance project, with 129 wells producing. The company said that over the last 45 days, 24 new wells have been brought on line, and 24 wells have resumed production.

Lake Arlington

Quicksilver Resources is currently producing 34 million cubic feet (MMcf) per day of natural gas at its Lake Arlington project. Thirty-nine wells are currently producing, and Quicksilver has deferred completion on 39 other wells that have been cased and drilled.

Range Resources Comments On Barnett Shale

Range Resources Corp. (RRC) made the following comments on the Barnett Shale during its third quarter earnings conference call held on October 22, 2009.

Rig Count

“We’ve decreased our rig count from about six rigs at the beginning of the year to one currently, we’ve driven production up from 110 million at the beginning of the year to about 130 million per day today.”

Rate of Return

“The rates of return on our Barnett wells are still very good. Even at $5 gas, they’re still 32%.” Acreage “We have many locations to drill in the Barnett, but fortunately, we don’t have any significant drilling commitments. The bulk of our acreage in the quarter, where our remaining locations exist, is largely held by production.”

Source: Seeking Alpha

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Devon Energy Discusses The Barnett Shale

Devon Energy (DVN) made the following comments regarding its operations in the Barnett Shale during its second quarter of 2009 conference call held on August 5, 2009:

Operations

“We are currently running eight Devon operated rigs. During the second quarter, we brought 98 operated Barnett wells online with an average IP rate of 2 million cubic feet per day. We are continuing to improve drilling efficiency in the Barnett and recently set a record by drilling and completing a well in nine days from spud to rig release.”

Production

“We believe that we can still comfortably drill to 229 Barnett wells planned for 2009. Our net production in Barnett averaged 1.2 Bcf equivalent per day in the second quarter, a 12% increase over the second quarter of 2008 and essentially flat with the first quarter of 2009.”

 “We did however see Barnett production begin to fall in July as a result of our lower activity levels. Given the reduction in drilling and lower levels of compression in the Barnett, we expect to exit 2009 producing about 1 billion cubic feet of natural gas equivalent per day here.”

Source: Seeking Alpha ___________________________________________________________________

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Texas Independence Pipeline Completed

Energy Transfer Partners LP (ETP) just recently announced the completion of the Texas Independence Pipeline, a 160 mile pipeline that serves the Barnett Shale in Texas. The pipeline originates in Maypearl, Texas and runs to Henderson, Texas. The pipeline adds capacity of 1.1 billion cubic feet (BCF) per day in the Barnett Shale, and Energy Transfer Partners LP said that with compression the capacity could be expanded to 1.75 BCF per day.

Quicksilver Resources - Barnett Shale

Quicksilver Resources (KWK) reported earnings for the second quarter of 2009, and updated its operations in the Barnett Shale of the Fort Worth Basin. The company has 175,000 net acres under lease and drilled 29 (22.9 net) wells during the quarter. The company also connected 27 (25.2 net) wells to sales.

Although many exploration and production companies are shifting away from the Barnett Shale to other shale plays in North America, Quicksilver Resources defended the Barnett Shale during its second quarter conference call.

“The Barnett continues to be the focus of our development activity. Despite speculation of its demise, the Fort Worth Basin is alive and well and providing increasing opportunities for Quicksilver. The Fort Worth Basin-Barnett is a proven area of low risk, low cost development with readily available infrastructure and access to services,” said Glenn Darden, the CEO of Quicksilver Resources.

Many operators are drilling but not completing wells as they anticipate higher natural gas prices later on in 2009 or 2010, and Quicksilver Resources is no exception.

“We project our inventory of drilled and cased but uncompleted wells in the Barnett to increase to approximately 150 wells by year end.” Costs are also falling, and the management of Quicksilver Resources indicated that year over year, the cost to drill is down 25%. ___________________________________________________________________

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Carrizo Oil and Gas - Barnett Shale

Carrizo Oil and Gas (CRZO) updated its operations in the Barnett Shale when it released its second quarter of 2009 earnings. Carrizo Oil and Gas produced 80 million cubic feet per day of natural gas from its Barnett Shale properties, and has three rigs working in that area.

The company said that it has 39 wells in the Barnett Shale that are drilled and not completed. These wells represent 87 million cubic feet equivalent per day of initial production. The industry has hundreds of wells in this type of status, as operators wait for natural gas prices to recover.

Chip Johnson, the CEO of Carrizo Oil and Gas said “I mean, at some price if we can sell all the gas at $6 NYMEX, which is what the strip is now, I think for 2010, we’d probably produce it.”

Lease prices have also dropped markedly in the Barnett Shale as drilling shifts to other shale plays. “The prices have dropped as low as 3 to 5,000 per acre in areas where they were 20,000 per acre last year… some holdouts in the core that still think they can get 15,000 per acre, but in general it’s dropped off below 10,000.” ___________________________________________________________________

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XTO Energy - Barnett Shale Update

XTO Energy (XTO) updated its drilling operations in the Barnett Shale when it released earnings for the second quarter of 2009. The company has 277,000 net acres under lease, and is running 10 rigs. Production from its Barnett Shale properties averaged 621 million cubic feet equivalent per day.

XTO Energy reported the initial production rates of 9 wells that it completed during the second quarter of 2009 on its acreage in the core area of the Barnett Shale:
 
Gafford C 1H - 5.5 million cubic feet per day (MMCFPD)
Arlington Surber B 2H - 5.1 MMCFPD
Gafford D 1H - 4.6 MMCFPD
Mira Lagos Unit 3H - 4.6 MMCFPD
Britt Unit 12H - 4.5 MMCFPD
Gafford C 4H - 4.3 MMCFPD
Gafford D 4H - 4.2 MMCFPD
Graystone 2H - 4.1 MMCFPD
Mira Lagos Unit 2H - 4.1 MMCFPD

XTO Energy reported the initial production rates of 2 wells that it completed during the second quarter of 2009 on its acreage in the Tier 1 area of the Barnett Shale:
 
Hyles 3H - 2.1 MMCFPD
Hyles 2H - 2.0 MMCFPD ___________________________________________________________________

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Chesapeake Energy - Updated Production Curve

Chesapeake Energy Corporation (CHK) reported its second quarter earnings and also issued an operations update on its exploration and development activity. Chesapeake Energy Corporation now has 310,000 acres under net lease in the Barnett Shale.

Chesapeake Energy Corporation updated its curve and normalized production history chart based on the results of 849 operated wells drilled in the Barnett Shale since the beginning of 2008.

The company estimates that it would earn a rate of return of 32% based on the following inputs:

Flat NYMEX natural gas prices of $7.00 per mcf
EUR of 2.65 bcfe
Well cost of $2.6 million
Initial Production rate of 2.5 mmcfd
First year decline rate of 70%
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Chesapeake Energy Updates Barnett Shale Operations

Chesapeake Energy Corporation (CHK) reported its second quarter earnings and also issued an operations update on its exploration and development activity. Chesapeake Energy Corporation now has 310,000 acres under net lease in the Barnett Shale.

Chesapeake Energy Corporation said that its average daily net production was approximately 650 mmcfe from its Barnett Shale properties, flat sequentially but up 40% year over year. Production growth here will be lower than some of the other shale plays, with production of 725 mmcfe net per day by the end of 2009, and 750 mmcfe net per day by the end of 2010.

Chesapeake Energy Corporation reported the results of five completions in the Barnett Shale in the second quarter:

Armet Dale Street 7H - a peak rate of 7.8 mmcfe per day and an initial 30-day average rate of 4.4 mmcfe per day.

Chevy 2H - a peak rate of 7.4 mmcfe per day and an initial 30-day average rate of 5.8 mmcfe per day.

Gann 4H - a peak rate of 7.0 mmcfe per day and an initial 30-day average rate of 5.4 mmcfe per day.

Donna Ray 1H - average daily production during the initial 30 days of 9.6 mmcfe

Donna Ray 3H - average daily production during the initial 30 days of 8.8 mmcfe ___________________________________________________________________

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Range Resources - Barnett Shale Update

Range Resources (RRC) reported its second quarter of 2009 earnings and updated its development program in the Barnett Shale. Barnett Shale production averaged 120 Mmcfe per day net to the company.

Range Resources said that it recently tested seven wells in Denton County and the wells had a combined initial production rate of 17 Mmcfe per day. The company will bring these wells online by the end of the month. Range Resources completed two wells in Parker County, one of which recently came online at an initial production rate of 7.6 Mmcfe per day.

The company is developing its Barnett Shale acreage utilizing two rigs. Range Resources said that its finding and development costs would be approximately $1.25 per mcfe for the last six months of 2009. ___________________________________________________________________

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