Top 10 highest producing Fayetteville Shale gas wells from 2007 ...
Arkansas Business November 28, 2011
panies also employ chokeback, a technique where a “choke” is placed in the pipe to slow production, usually to wait until selling prices are higher. “It’s not an uncommon practice,” said Shields, the head of Arkansas’ chapter of NARO. “Basically, it’s a conservation practice. Some companies think you would ultimately get a higher amount of gas out of the well.” Most royalty owners, Shields said, would not object to chokeback, as it generally means they would receive a higher royalty later on when prices catch up. The technique doesn’t account for general production declines, Shields added. “If you plot those declines, they’re a straight line,” he said. “If you see a dog leg, a sudden drop over the space of one or two months, and then it resumes at the same angle, you can pretty well presume they changed out the choke.” Bengal noted histories weren’t yet established enough to understand the ultimate reserve from a single well, but it may be somewhere in the 2 to 2.5 Bcf range. “It’s highly variable depend-
Top 10 highest producing Fayetteville Shale gas wells from 2007, compared with 2010 Owner Seeco Inc. Seeco Inc. BHP Billiton Seeco Inc. XTO Energy Inc. XTO Energy Inc. Seeco Inc. Seeco Inc. BHP Billiton Seeco Inc.
Name Arklan 09-111-32 09-08 2-22 Dismang 1-7D Carr, Jerome 9-15 2-31 H Whisenhunt 2-36H Whisenhunt 1-36H Green Bay Packaging 2-22H Prince, Loui 9-15 1-22 Gaither 1-19H Stobaugh, Nellie 09 16 1-12H
2007 MCF 936,692 925,960 730,214 722,000 701,997 695,438 685,953 647,245 637,504 617,777
2010 MCF 694,527 156,290 405,106 245,768 198,763 142,389 162,318 187,396 221,334 275,872
Reduction 26% 83% 44% 66% 71% 80% 76% 71% 65% 55%
Permit 39299 39292 38796 39082 39389 38621 38962 39106 39358 39275
County Cleburne White White Conway Van Buren Van Buren Van Buren Conway White Conway
Source: Arkansas Oil & Gas Commission. MCF: Thousand cubic feet of gas sold.
ing on the area, laterals and stimulation in a particular well,” he said.
Unchartered Territory Shale gas production is still relatively new, having been first used to wide commercial advantage starting in the late 1990s in Texas’ Barnett Shale, so drilling techniques are improving rapidly. “For every well that’s drilled, the lessons learned from that particular well are used to ensure that they can make sure the next well can take advan-
tage of that,” Bengal said. “It’s a constant process of trying to optimize the drilling program.” Even in the present economic environment, where gas prices have been stuck at $4 or below, companies are constantly building more wells and extracting more gas. Since January, about 817 new drilling permits have been issued in the state, and of those, 777 were for the shale area. Arkansas now receives almost $5 million in severance tax revenue each month from the companies and the royalty owners. In 2009, the first year that the
current severance tax rate was in place, the monthly average was $2.7 million; last year, it was about $4.5 million. “The amount of production is increasing year to year,” Bengal said. Before production in the Fayetteville Shale hit its stride, “the state produced in 2004 approximately 180 billion cubic feet of gas. Probably by the time we conclude 2011, we’ll have close to 1 trillion cubic feet a year.” The increase can’t continue forever, Bengal acknowledged, but there’s still a surplus of ground to cover.
“If you assume six wells per 640-acre drilling unit — that’s a very conservative number — if you do that, you get about 15,000 wells,” he said. “In the shale area, we have about 4,100 wells.” The bottom line, it seems, is that if companies keep drilling, gas will keep flowing. “Individual wells decline; they always decline,” Daily said. “If you’re replacing that production with new wells, you’re filling the pipelines, moving the gas; then hopefully the price of selling gas is enough to make it work.” n
Largest Gas Production Companies Largest Companies Ranked by volume of 2010 sales to first buyer Company Address, State Phone, Fax, Web Site Seeco Inc. P.O. Box 13408, Fayetteville, AR 72703-1004 (479) 521-1141, (479) 521-0328, www.SWN.com Chesapeake Operating Inc.C P.O. Box 18496, Oklahoma City, OK 73154 (405) 848-8000, (405) 879-5419, www.CHK.com
MCF Sold in 2010 % Change From 2009
No. of Wells in 2010 Average MCF Per Well 2010B No. Added Since 2009 2009B
Production Counties
Top Executive
Cleburne, Conway, Crawford, Faulkner, Franklin, Johnson, Logan, Pope, Scott, Sebastian, Van Buren, White, Yell Cleburne, Conway, Crawford, Faulkner, Franklin, Independence, Jackson, Johnson, Logan, Scott, Sebastian, Van Buren, White Cleburne, Crawford, Faulkner, Franklin, Independence, Jackson, Johnson, Logan, Pope, Scott, Sebastian, Van Buren, White, Yell Crawford, Franklin, Johnson, Logan, Sebastian
J. Alan Stubblefield SVP
511,764,617 43.4%
2,422 562
211,298 191,842
197,750,786 63.6%
871 224
227,039 186,773
133,284,434 15.5%E
1,848 82E
72,124 65,334
Box 2407, Fort Smith, AR 72902-2407 4 P.O. (479) 783-4191, (479) 783-4195 Forest Oil Corp. 17th St., Suite 3600, Denver, CO 80202 5 707 (303) 812-1607, (303) 812-1454, www.ForestOil.com
29,262,514 19.1%
784 -19
37,325 30,608
17,989,777 -18.8%
491 22
36,639 47,220
Franklin, Logan, Sebastian
H. Craig Clark President & CEO
Hanna Oil & Gas Co. P.O. Box 1356, Fort Smith, AR 72902-1356 (479) 782-8808, (479) 782-1343, www.HannaOilAndGas.com Bay Oaks Resources LLCF P.O. Box 10630, Fort Smith, AR 72917 242-4518, (479) 242-4520 Sedna Energy Inc 4600 Rogers Ave., Fort Smith, AR 72903 (479) 782-4111, (479) 782-4614 Ross Explorations Inc. 2917 Old Greenwood Road, Fort Smith, AR 72903 (479) 783-7022, (479) 783-7950
5,855,577 5.4%
213 2
27,491 26,327
Crawford, Franklin, Johnson, Logan, Pope, Sebastian, Yell
William Hanna President
4,969,150 NA
70 70
70,988 NA
Franklin, Logan, Scott, Sebastian
Mark Wilson President
3,095,551 -10.7%
156 -15
19,843 20,275
Crawford, Franklin, Johnson, Logan, Pope, Scott, Sebastian
Jon Glass CEO
2,590,977 -24.9%
77 2
33,649 45,996
Logan, Pope, Sebastian, Yell
Tim R. Smith President
1 2
XTO Energy Inc.D
Houston St., Suite 2000, Fort Worth, TX 76102-6298 3 810 (817) 870-2800, (817) 870-1671, www.XTOEnergy.com Stephens Production Co.
6 7 8 9
15
1 Some wells may have been in production less than a year, and younger wells tend to produce more than mature wells 2 Arkansas assets sold to BHP Billiton Ltd. of Melbourne, Australia, on March 31, 2011 3 Acquired by ExxonMobil Corp. on June 25, 2010, and then acquired Petrohawk Energy Corp. of Houston in December 2010 4 Former Petrohawk assets included for comparison 5 Assets operated by Highland Oil & Gas LLC of Houston in 2010
Aubrey McClendon Chairman & CEO Jack Williams President William S. Walker President
Researched by Gwen Moritz
panies also employ chokeback, a technique where a “choke” is placed in the pipe to slow production, usually to wait until selling prices are higher. “It’s not an uncommon practice,” said Shields, the head of Arkansas’ chapter of NARO. “Basically, it’s a conservation practice. Some companies think you would ultimately get a higher amount of gas out of the well.” Most royalty owners, Shields said, would not object to chokeback, as it generally means they would receive a higher royalty later on when prices catch up. The technique doesn’t account for general production declines, Shields added. “If you plot those declines, they’re a straight line,” he said. “If you see a dog leg, a sudden drop over the space of one or two months, and then it resumes at the same angle, you can pretty well presume they changed out the choke.” Bengal noted histories weren’t yet established enough to understand the ultimate reserve from a single well, but it may be somewhere in the 2 to 2.5 Bcf range. “It’s highly variable depend-
Top 10 highest producing Fayetteville Shale gas wells from 2007, compared with 2010 Owner Seeco Inc. Seeco Inc. BHP Billiton Seeco Inc. XTO Energy Inc. XTO Energy Inc. Seeco Inc. Seeco Inc. BHP Billiton Seeco Inc.
Name Arklan 09-111-32 09-08 2-22 Dismang 1-7D Carr, Jerome 9-15 2-31 H Whisenhunt 2-36H Whisenhunt 1-36H Green Bay Packaging 2-22H Prince, Loui 9-15 1-22 Gaither 1-19H Stobaugh, Nellie 09 16 1-12H
2007 MCF 936,692 925,960 730,214 722,000 701,997 695,438 685,953 647,245 637,504 617,777
2010 MCF 694,527 156,290 405,106 245,768 198,763 142,389 162,318 187,396 221,334 275,872
Reduction 26% 83% 44% 66% 71% 80% 76% 71% 65% 55%
Permit 39299 39292 38796 39082 39389 38621 38962 39106 39358 39275
County Cleburne White White Conway Van Buren Van Buren Van Buren Conway White Conway
Source: Arkansas Oil & Gas Commission. MCF: Thousand cubic feet of gas sold.
ing on the area, laterals and stimulation in a particular well,” he said.
Unchartered Territory Shale gas production is still relatively new, having been first used to wide commercial advantage starting in the late 1990s in Texas’ Barnett Shale, so drilling techniques are improving rapidly. “For every well that’s drilled, the lessons learned from that particular well are used to ensure that they can make sure the next well can take advan-
tage of that,” Bengal said. “It’s a constant process of trying to optimize the drilling program.” Even in the present economic environment, where gas prices have been stuck at $4 or below, companies are constantly building more wells and extracting more gas. Since January, about 817 new drilling permits have been issued in the state, and of those, 777 were for the shale area. Arkansas now receives almost $5 million in severance tax revenue each month from the companies and the royalty owners. In 2009, the first year that the
current severance tax rate was in place, the monthly average was $2.7 million; last year, it was about $4.5 million. “The amount of production is increasing year to year,” Bengal said. Before production in the Fayetteville Shale hit its stride, “the state produced in 2004 approximately 180 billion cubic feet of gas. Probably by the time we conclude 2011, we’ll have close to 1 trillion cubic feet a year.” The increase can’t continue forever, Bengal acknowledged, but there’s still a surplus of ground to cover.
“If you assume six wells per 640-acre drilling unit — that’s a very conservative number — if you do that, you get about 15,000 wells,” he said. “In the shale area, we have about 4,100 wells.” The bottom line, it seems, is that if companies keep drilling, gas will keep flowing. “Individual wells decline; they always decline,” Daily said. “If you’re replacing that production with new wells, you’re filling the pipelines, moving the gas; then hopefully the price of selling gas is enough to make it work.” n
Largest Gas Production Companies Largest Companies Ranked by volume of 2010 sales to first buyer Company Address, State Phone, Fax, Web Site Seeco Inc. P.O. Box 13408, Fayetteville, AR 72703-1004 (479) 521-1141, (479) 521-0328, www.SWN.com Chesapeake Operating Inc.C P.O. Box 18496, Oklahoma City, OK 73154 (405) 848-8000, (405) 879-5419, www.CHK.com
MCF Sold in 2010 % Change From 2009
No. of Wells in 2010 Average MCF Per Well 2010B No. Added Since 2009 2009B
Production Counties
Top Executive
Cleburne, Conway, Crawford, Faulkner, Franklin, Johnson, Logan, Pope, Scott, Sebastian, Van Buren, White, Yell Cleburne, Conway, Crawford, Faulkner, Franklin, Independence, Jackson, Johnson, Logan, Scott, Sebastian, Van Buren, White Cleburne, Crawford, Faulkner, Franklin, Independence, Jackson, Johnson, Logan, Pope, Scott, Sebastian, Van Buren, White, Yell Crawford, Franklin, Johnson, Logan, Sebastian
J. Alan Stubblefield SVP
511,764,617 43.4%
2,422 562
211,298 191,842
197,750,786 63.6%
871 224
227,039 186,773
133,284,434 15.5%E
1,848 82E
72,124 65,334
Box 2407, Fort Smith, AR 72902-2407 4 P.O. (479) 783-4191, (479) 783-4195 Forest Oil Corp. 17th St., Suite 3600, Denver, CO 80202 5 707 (303) 812-1607, (303) 812-1454, www.ForestOil.com
29,262,514 19.1%
784 -19
37,325 30,608
17,989,777 -18.8%
491 22
36,639 47,220
Franklin, Logan, Sebastian
H. Craig Clark President & CEO
Hanna Oil & Gas Co. P.O. Box 1356, Fort Smith, AR 72902-1356 (479) 782-8808, (479) 782-1343, www.HannaOilAndGas.com Bay Oaks Resources LLCF P.O. Box 10630, Fort Smith, AR 72917 242-4518, (479) 242-4520 Sedna Energy Inc 4600 Rogers Ave., Fort Smith, AR 72903 (479) 782-4111, (479) 782-4614 Ross Explorations Inc. 2917 Old Greenwood Road, Fort Smith, AR 72903 (479) 783-7022, (479) 783-7950
5,855,577 5.4%
213 2
27,491 26,327
Crawford, Franklin, Johnson, Logan, Pope, Sebastian, Yell
William Hanna President
4,969,150 NA
70 70
70,988 NA
Franklin, Logan, Scott, Sebastian
Mark Wilson President
3,095,551 -10.7%
156 -15
19,843 20,275
Crawford, Franklin, Johnson, Logan, Pope, Scott, Sebastian
Jon Glass CEO
2,590,977 -24.9%
77 2
33,649 45,996
Logan, Pope, Sebastian, Yell
Tim R. Smith President
1 2
XTO Energy Inc.D
Houston St., Suite 2000, Fort Worth, TX 76102-6298 3 810 (817) 870-2800, (817) 870-1671, www.XTOEnergy.com Stephens Production Co.
6 7 8 9
15
1 Some wells may have been in production less than a year, and younger wells tend to produce more than mature wells 2 Arkansas assets sold to BHP Billiton Ltd. of Melbourne, Australia, on March 31, 2011 3 Acquired by ExxonMobil Corp. on June 25, 2010, and then acquired Petrohawk Energy Corp. of Houston in December 2010 4 Former Petrohawk assets included for comparison 5 Assets operated by Highland Oil & Gas LLC of Houston in 2010
Aubrey McClendon Chairman & CEO Jack Williams President William S. Walker President
Researched by Gwen Moritz
