Haynesville Shale

EXCO Resources - Haynesville Shale Update

EXCO Resources (XCO) held a conference call on February 24, 2010 in conjunction with its fourth quarter of 2009 earnings report, and discussed its operational activities in the Haynesville Shale. The company will be operating 14 rigs in the Haynesville Shale beginning in the spring of 2010, and is not under time pressure because almost all its acreage is held by production.

“The Haynesville shale has been our focus for the last year. We currently have 13 rigs running in the play. We have a 14th coming April 1st, Mike told me, so, and that will probably be it, although there are some opportunities if we make certain acquisitions we will probably be adding to that.”

“We’re very comfortable with our assets over there and the 14 rigs should be enough. I would say on the acreage that we had when we did our joint venture we’re almost 100% HBP right now, so we’re very comfortable, we’re very flexible, and we’re looking for additional opportunities out there.”

“In the fourth quarter we were down to 44 days from spud to rig release. We’re actually now seeing some recent three wells; we had 37 days rig release, so that number is down 45% to 50%.”

Source: Seeking Alpha

Petrohawk Energy Drives Costs Down In The Haynesville Shale

Petrohawk Energy (HK) reported earnings for the fourth quarter of 2009, and held a conference call on February 23, 2010, to discuss the results. The company has reduced its costs in the Haynesville Shale, and will continue to drive down costs further in 2010.

“In 2009, our average well cost in the Haynesville Shale drilling, completion and hook-up was $10.5 million. This year we think we can get that down to an average of between $9 million and $10 million, and we are already achieving that on some wells.”

“Our large presence and position in the Haynesville has yielded numerous advantages when it comes to securing materials and services. And this is another of those things that is not comparable among operators. We have leveraged our position to negotiate terms on rigs, materials, completion services, and transportation.”

“More recently, we locked in pricing supply on 75% of our expected requirement for pumping services for 2010 with one of our preferred service providers. Similar negotiations are ongoing on transportation and in other areas.”

“From rig release to sales is typically averaging about three weeks in maybe some of the more challenging areas with pipeline construction. It might be a hair more, but I’d say we are in that 40 to 45 days spud to spud and add another three, maybe four weeks on top of that on the outside for sales.”

Source: Seeking Alpha

Comstock Resources - Haynesville Shale Conference Call Comments - Part II

Comstock Resources (CRK) reported its earnings for the fourth quarter of 2009, and held a conference call on February 9, 2010 to discuss the results. The company has shown improved operational efficiency as it has developed its Haynesville Shale acreage, and has reduced its time to drill from 49 to 37 days. Comstock Resources also reported increased costs to drill in the Haynesville Shale due to improved pricing leverage by oil service companies due to the rebound in the rig count.

Haynesville Shale Time to Drill

“The number of days that has taken us to drill the 33 horizontal Haynesville wells on the prior slide. Our average drill time for all 33 wells drilled to date is 49 days. You will see that the average drill time for our first five wells that we drilled was 51 days, compared to an average drill time of 37 days for our last five wells.”

Haynesville Shale Finding and Development Costs

“The Haynesville Shale program delivered excellent finding cost in 2009. We spent $345 million in 2009 on acquisitions, exploration and development activities, which added 210 Bcfe to our proved reserve base resulting in finding cost of $1.64 per Mcfe. If you exclude the $26 million we spent on unevaluated leases in 2008, the finding cost improves to $1.52.”

“The Haynesville is unique among the shale plays since it is an abnormally pressured shale, and requires specialized equipment to drill and complete them. But again, we do feel we can offset some of that cost increase by the improved efficiencies although not all, we are pretty far along in improvements on our drilling side.”

“We are estimating between $7.5 million to $8 million. That is with the increased number of fracs that we are planning upon (18 stages). ”

Source: Seeking Alpha