Friday, January 30, 2009

Recycling Frac Water - Marcellus Shale PA

As you know, Pennsylvania has really cracked down on companies who are drilling in the Marcellus Shale as they do not want to contaminate the environment from the result of bad drilling practices.

One company, Equitable Resources ( EQT ), is starting a project to recycle frac water located in the Marcellus Shale. Equitable hopes to have this project done by the third quarter of 2009.

What is frac water? There are many different way to drill a natural gas shale well. The most common way it to blast a fresh water/sand combination at the shale it self in order to fracture it. Once this process is completed, the water becomes contaminated. It must be pumped back out and stored. To prevent a potential water shortage, Equitable is trying to recycle the water so it can be used over again.

( From Seeking Alpha ) - And then the last question is with the change in the administration and Congress, we are hearing some noise about on the environmental issues, water, and even possible making some noise about regulating fracture stimulation. Any thoughts on that?

Unidentified Company Representative

Well, yes, I’ll save the obvious ones, but what we are going to do, and I mentioned this a few times on the road recently, is we are in the process of building a recycling plant for Marcellus, water handling, we hope it will be up in the third quarter, or maybe a little earlier during this year. We are going to try to recycle that water.

Now that doesn’t address, which is the one concern that some people have that we are hurting the aquifer with salt water from the cracks. I hope adults will finally come to the conclusion that we've been doing that for 70 years now, and haven't damaged any aquifer, but forget about all that, we are trying to recycle as much of that frac water as we possibly can.

And, you know, drill more wells from the same pad so that you can reuse the water. We are going to do pan drilling, it is going to help in the Marcellus, recycling is going to help in the Marcellus, but we are focusing more of our attention on the disposal of the water, rather than the acquisition of the water.

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Woodford Shale: Newfield Exploration NFX 2009

Newfield Exploration ( NFX ) has come out and given an operational update on the Woodford Shale located in Oklahoma.

The Woodford Shale, located in the Arkoma Basin of southeastern Oklahoma, was Newfield's largest investment region in 2008 and will remain so in 2009. Total Woodford production in 2008 increased 65% over 2007 volumes. Gross operated production from the Woodford in early December exceeded the Company's year-end goal of 250 MMcfe/d. Due to longer lateral completions and efficiency gains, Newfield expects to grow its 2009 Woodford production by about 30%, despite running fewer operated rigs.

"The positive benefits of moving from the 'hold the ground' phase in the Woodford to development mode in 2008 is obvious from the improvement in our finding costs in the Mid-Continent," said Lee K. Boothby, Newfield Senior Vice President. "Our drilling and completion costs in 2008, stated on a lateral foot basis, were 38% lower than in 2007. We have drilled about 250 horizontal wells to date and our lateral lengths continue to grow. We now expect that our average lateral length in 2009 will be about 5,000', compared to just 2,428' in 2007 and 4,436' in 2008. This should result in higher initial production rates, greater recoveries per well and improved finding cost metrics."

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Thursday, January 29, 2009

Woodford Shale: PQ Petroquest 2009

Petroquest Energy released earnings this morning and gave investors an operational update on how the Woodford Shale is going. January 29, 2009

As previously announced, the Company completed two operated horizontal wells in the Woodford Shale during October 2008. The Company recently completed three additional operated horizontal wells during the fourth quarter of 2008. The following is a summary of the results:

In addition to the above completions, the Company initiated completion operations on its 7,057 foot extended lateral well. After conducting two stages of the completion, the wellbore encountered mechanical problems. The Company has repaired the wellbore and the first two stages began producing at rates as high as 3,695 Mcf. The Company plans to conduct the remaining 16 stages of the completion during 2009. The Company estimates that its current net production from its Oklahoma properties is approximately 40 MMcfe per day.

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Wednesday, January 28, 2009

Marcellus Shale: Clearfield County PA 2009

Carrizo Oil & Gas provided an update on the Marcellus Shale for 2009. Carrizo is looking to start drilling in Clearfield County, PA in March of 2009.

Carrizo's activity in the Marcellus Shale is shifting from lease acquisition to evaluation drilling. In addition to two wells drilled through the Marcellus in late 2008, seven wells are currently in the permitting stage. The company expects to initiate drilling on its acreage in March starting with a well in Clearfield, PA.

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Barnett Shale - Tarrant Denton County Texas

Today, 1/28/09, Carrizo Oil & Gas provided an update on the Barnett Shale natural gas field located in Tarrant County, TX and Denton County Texas.

Since January 1st, 2009 the company has brought eleven new Barnett Shale horizontal natural gas wells on production. The combined daily production from these wells amounts to slightly over 31.5 MMcfe/day gross or 22 MMcfe/day net to Carrizo. President and CEO S. P. "Chip" Johnson, commented, "The initial production rates from these wells meet our expectations for core Barnett locations although right of way and permitting complications delayed them from coming on-stream in December as originally anticipated. Included in these new wells is our first 'stagger stacked' lateral well which was drilled on the Cain lease in southeast Tarrant County. This well tests the concept of placing two layers of horizontal wells in thicker parts of the shale. The well came on production and is performing as well as the other five wells on the lease, providing us encouraging early data to use in optimizing our future Barnett exploitation program. We currently have four rigs drilling in the core of the Barnett, three in southeast Tarrant County and one in Denton County."

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Bakken Shale: Hess ( HES ) January 29, 2009

Hess ( HES ) released earnings 1/28/09 and commented a little bit on the Bakken Shale.

( From Seeking Alpha ) - The Bakken contributed about 13% of the total net reserve adds at the end of the year and that’s both a consequence of performance as well as drilling so we’ve been very pleased with our experience in the Bakken. We’ve obviously shifted downwards in the Bakken in terms of drilling activity at this time because we were really ramped up and growing and going during 2008. So, we actually welcome the opportunity to take a more studied approach to the Bakken.
With respect to profitability and the Bakken is profitable right now and I expect that in this environment as we see as John Rielly mentioned pressures on contractors and suppliers to reduce costs, that we will continue to be profitable even should crude prices continue downwards.

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Haynesville Shale: Caddo Parish, Louisiana - Cubic Energy

Today, 1/28/09, Cubic Energy ( QBC ) has come out and given an updates on an additional well being drilled in the Haynesville Shale. This well is located in Caddo Parish, LA.

Cubic Energy (QBC) announces today it has accepted a proposal to participate in the horizontal drilling of Chesapeake Energy's ( CHK ) Clingman Acres 11H well. This well is located in the Johnson Branch Field of Caddo Parish, Louisiana, and will be horizontally drilled to a measured depth of 17,000 feet, followed by a Haynesville Shale completion.

The Clingman Acres 11H is located in Section 11, Township 15 North - Range 15 West in Caddo Parish, Louisiana, which is adjacent to the east side of Cubic's Johnson Branch Acreage. Cubic has an estimated 2.8% working interest in the well.

Cubic currently has 12 wells producing in its Johnson Branch acreage, and 10 wells producing in its more southern acreage position of Bethany Longstreet in DeSoto Parish, Louisiana.
Calvin Wallen III, Cubic's President and Chief Executive Officer stated, ``The Clingman Acres 11H will be located on the eastern edge of Cubic's Johnson Branch Acreage. This area has been proven, through Cubic's vertical drilling and Chesapeake's horizontal drilling, to be extremely prolific in the Haynesville Shale. We are very excited to have yet another opportunity for Horizontal Haynesville Shale development.''

Cubic Energy, Inc. is an independent company engaged in the development and production of, and exploration for, crude oil and natural gas. The Company's oil and gas assets and activity are concentrated primarily in Texas and Louisiana.

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Marcellus Shale: MarkWest Energy MWE 2009

Yesterday, 1/27/09, Mark West Energy ( MWE ) stock exploded higher due to a dividend and the following news related to the Marcellus Shale.

2009—MarkWest Energy Partners, L.P. (NYSE: MWE) and NGP Midstream & Resources, L.P. (M&R) today announced an agreement to form a joint venture dedicated to the construction and operation of natural gas midstream services to support producer customers in the Marcellus Shale.
Under the terms of the joint venture, which will be owned 60 percent by MarkWest and 40
percent by M&R, MarkWest will operate the facilities and will contribute approximately $100 million of existing Marcellus Shale assets to the joint venture. M&R will invest the next $200 million of capital, which approximates the capital required to fund the Marcellus project in 2009. Capital funding for 2010 and 2011 will be driven by producer drilling programs. In order to achieve the 60 / 40 capital structure MarkWest will invest approximately $200 million in incremental capital by the end of 2011 in accordance with the joint venture agreement.

The Marcellus Shale continues to develop into one of the most prolific and economic natural gas shale plays in the United States. MarkWest has established a leading position in providing midstream services in the Marcellus Shale, including the recent development of gathering and processing infrastructure for Range Resources in southwest Pennsylvania. By the end of 2009, MarkWest and M&R expect the joint venture to be capable of processing up to 240 million cubic feet per day of gas for Range and other producers.

“M&R will be an excellent partner in our Marcellus project,” said Frank Semple, Chairman, President and Chief Executive Officer of MarkWest Energy Partners. “M&R has a strong appreciation for the long-term strategic value of the Marcellus play and shares our vision of delivering best-of-class midstream services to producer customers, including our significant relationship with Range Resources. The structure of the joint venture will allow MarkWest to achieve its long-term objectives in the Marcellus while significantly reducing capital requirements over the next several years, which is a critical component of our balance sheet and liquidity objectives. The experience and expertise of MarkWest and M&R are very complementary and we look forward to a long-term business relationship.”

Tuesday, January 20, 2009

Bakken Formation: Mountrial County ND Oil Shale Update

Whiting Petroleum ( WLL ) provides an update on the Bakken Shale Formation in Mountrial County, North Dakota today, 1/20/09. Whiting is active in the Sanish Field and the Parshall Field.

Sanish Field. Whiting's Sanish area in Mountrail County, North Dakota encompasses 125,557 gross acres (83,606 net acres). December 2008 net production in the Sanish field averaged 7.5 MBOE/d, an 832% increase from 0.8 MBOE/d in December 2007. As of January 12, 2009, Whiting has participated in 65 wells (27 operated) that target the Bakken formation, of which 49 are producers, seven are completing and nine are drilling. Of these operated wells, 23 were completed in 2008. Whiting has completed and placed on production its first Bakken infill well in the Sanish field, the McNamara 42-26H. This well was drilled between two horizontal Bakken producers, the Locken 11-22H and the Liffrig 11-27H. The initial production rate at the McNamara well was 2,170 BOE/d (measured December 8, 2008), which falls between the initial production rates of the two offset wells. There was no indication of communication or interference with either of the offset wells. Based on these results, Whiting expects to develop its leases with two 10,000-foot horizontal wells in each 1,280-acre spacing unit. Whiting has also completed its first Three Forks horizontal well in the Sanish field, the Braaflat 21-11TFH. The initial production rate at the Braaflat well was 1,005 BOE/d (measured January 1, 2009). Production and pressure data from this well will be analyzed over several months to determine the viability of developing the Three Forks.

Whiting intends to drill an additional 28 operated Bakken wells in the Sanish field during 2009, with an average working interest of 74%, five of which were drilling at January 12, 2009. Whiting expects an average of six drilling rigs to be working in the Sanish field during 2009. Whiting expects its net capital expenditures in the Sanish field during 2009 to be approximately $150.6 million.

Parshall Field. Immediately east of the Sanish field is the Parshall field, where Whiting owns interests in 73,760 gross acres (18,315 net acres). Whiting's net production from the Parshall field averaged 6.7 MBOE/d in December 2008, a 341% increase from 1.5 MBOE/d in December 2007. As of January 12, 2009, Whiting has participated in 95 Bakken wells, the majority of which are operated by EOG Resources, Inc., of which 85 are producers, four are completing and six are drilling. Of these wells, 64 were completed in 2008. Whiting intends to participate in the drilling of an additional nine wells in the Parshall field during 2009, with an average working interest of approximately 16%. Whiting expects its net capital expenditures in the Parshall field during 2009 to be approximately $12.1 million.

Thursday, January 8, 2009

Bakken Shale: Dunn County North Dakota

Today, 1/8/09, Kodiak Oil & Gas ( KOG ) has come out and given an operational update on the Bakken Shale and the Sanish/Three Forks region on the Bakken Shale. They have acerage positions in Dunn County, North Dakota.

Williston Basin Operations Update -- Dunn County, North Dakota

Kodiak's exploration efforts target oil and gas production from the middle member between the upper and lower Bakken shales, which is the source rock for existing hydrocarbons. The Three Forks/Sanish Formation, a productive interval lying directly below the lower Bakken shale, is also expected to be a future exploration target. Commercial production from the Three Forks/Sanish Formation is being reported by operators in the immediate area.

The Moccasin Creek (MC) #16-34-2H well (Kodiak operates with 60% working interest [WI] and 49% net revenue interest [NRI]) recently reached total depth. The well, located in the southwestern portion of Kodiak's leasehold, was drilled to an approximate total vertical depth (TVD) of 10,350 feet and a total measured depth (TMD) of 15,525 feet. During drilling operations, the wellbore encountered oil and gas shows in the lateral. A liner was run to total depth and completion work is tentatively scheduled after drilling of the MC #16-34H well is finished. The well successfully reached TMD in 38 days, which is within the Company's initial estimate of 40 days to total depth.

The drilling rig has been skid approximately 50 feet where drilling recently commenced on the MC #16-34H well (Kodiak operates with 60% WI and 49% NRI). The MC #16-34H is projected to be drilled to a TVD of 10,350 feet and proposed TMD of 14,800 feet.
Six miles east of the Moccasin Creek wells, Kodiak has completed construction of a drilling pad for the Charging Eagle (CE) #1-22-15H and the CE #1-22-23H wells. Approximately 10 miles north of the Moccasin Creek locations, a second drill pad is being constructed for the Two Shield Butte (TSB) #16-8H and the TSB #16-8-16H wells. Kodiak operates both locations and will utilize the skid package on its rig to move between wells, minimizing mobilization time and surface disturbance. Upon completion of the MC #16-34H well, the drilling rig will be moved to one of these drilling pads.

As of January 1, 2009, Kodiak had approximately 56,000 gross and 36,000 net acres under lease on the Fort Berthoud Indian Reservation (FBIR). Kodiak operates all of its leasehold on the FBIR, with the exception of approximately 9,000 net acres that are in a participating area previously established with another operator.

Wednesday, January 7, 2009

Bossier Shale: East Texas Gastar ( GST ) Hits Big!

Need more evidence that the Bossier Shale is better then the Haynesville Shale? Gastar Exploration ( GST ) came out and announced one of their Bossier Shale wells are hitting 23.0 MMCF per day of Natural Gas. This is an OUTSTANDING Well!

For those who aren't familiar with these shale plays around the USA and Canada, the Haynesville Shale is located in Louisiana and East Texas. Below the Haynesville Shale you have the Bossier Shale.

Gastar Exploration Ltd. (NYSE Alternext US:GST) and today announced that it has successfully completed its best producing well to date, the Belin #1, which was completed in two lower Bossier zones. The well is flowing at a combined initial gross sales rate of 41.2 MMcf/day on a 20/64ths inch choke with approximately 10,300 psi of flowing casing pressure. Gastar owns a 52% working interest before payout (40% net revenue interest before payout) in the Belin #1.

"The Belin #1 is our best producer to date, and based on the high quality of the reservoir rock and the strong initial production rate, we expect it will also be our best well to date in the Hilltop area in terms of estimated recoverable reserves," said J. Russell Porter, Gastar's President and CEO.

"To put this well into perspective, our biggest producer prior to the Belin #1 was the Wildman #3, which IP'ed at 23 MMcf/day. Comparing it against the entire play, we believe the Belin #1 is among the top ten best wells reported by any producer in any area of the Bossier," he added.
"The Belin #1 contains the highest porosity rock we have drilled to date, and we believe there is high-quality reservoir rock uphole from our initial lower completions that could allow us to maintain strong flow rates well into the future."

In addition, Gastar is currently drilling a sidetrack to the LOR #7 and expects to reach total depth in approximately 5 to 10 days. Gastar has a 50% working interest before payout (37.5% net revenue interest before payout) in the LOR #7.

Haynesville Shale: Caddo Parish, Louisiana Goodrich Petroleum GDP Well

Goodrich Petroleum ( GDP ) has announced a completion of a new Haynesville Shale well in Caddo Parish Louisiana. 14.5 MMcf's!

GDP has completed its initial horizontal Haynesville Shale well, the Chesapeake Energy Corporation-operated Holland 17H-1, which tested at a rate of approximately 14.5 MMcf per day on a 24/64 inch choke with 6,000 psi. The well, which was drilled to 16,200 feet, had a horizontal displacement of approximately 4,400 feet (3,800 feet cased), and is located in the Company's Bethany-Longstreet area in Caddo Parish, Louisiana. Goodrich owns a 50% working interest in the well, Chesapeake owns 40% and Plains Exploration & Production Company owns 10%.

The Company has completed its Estes 2H (100% WI), a James Lime horizontal well on its Cotton South prospect area, which tested at 7.0 MMcf per day on a 35/64 inch choke with 1,500 psi.

Marcellus Shale: Marion West Virginia TENG 4th Well

Trans Energy ( TENG ) has announced this week that they have completed their 4th Vertical Well in the Marcellus Shale - Natural Gas Field. This latest Marcellus Shale well was drilled in Marion County, West Virginia.

Trans Energy, Inc. (OTC BB: TENG) announced today that its Blackshere #101 well in Marion County, West Virginia was successfully fraced on December 29th and is currently awaiting connection to a sales line. The Blackshere #101 is completed in the Marcellus shale, a prolific new “resource play” in Appalachia, similar to the Barnett, Fayetteville and Haynesville shales which have grown to become a significant base of hydrocarbon reserves in the United States.

James K. Abcouwer, President and CEO of Trans Energy, said “This fourth Marcellus well is located in Marion County which is the county to the east of our existing Marcellus wells and is a step out of what we consider our proven area. We are delighted with its initial indications. We are optimistic that the positive results from our three vertical wells in Wetzel County and now with our most recent completion in Marion County can be replicated throughout our acreage position in northern West Virginia. We’re now beginning a horizontal well program in yet another significant step forward for Trans Energy to properly develop its acreage position. We’re pleased to have achieved this sizeable acreage position centered on the Wetzel-Marion-Doddridge Counties area, which looks to be one of the most – if not the most – prolific part of the Marcellus resource in Appalachia.”

Woodford Shale: Canadian County, OK Marathon Oil MRO

Marathon Oil ( MRO ) has come out and given an update on the Woodford Shale - Natural Gas Field located in Canadian County Oklahoma. This mean, the Woodford Shale is moving West in the State of Oklahoma.

As part of the Company's targeted expansion into key resource plays of North America, Marathon Oil Corporation (NYSE: MRO) announced today that it has participated in a successful step-out discovery well on the Brickyard prospect, located in the northeast area of the Anadarko Basin, targeting the Woodford Shale resource play in Canadian County, Oklahoma.
The Cana No. 1-15H discovery well was drilled to a true vertical depth of 13,177 feet and horizontally for 4,090 feet, for a total measured well depth of 17,267 feet. The well flowed at an initial rate of 5.2 million cubic feet of gas per day. Marathon is the well operator and holds approximately 57 percent interest in the Cana No. 1-15H well. Other interest owners include Questar Corporation and Cimarex Energy.

"Marathon is encouraged by the results of the Brickyard prospect as we continue to develop the emerging Woodford Shale resource play," stated Annell R. Bay, senior vice president, Worldwide Exploration. "We are using 3-D seismic technology to better define our targets and applying advanced drilling technology to reduce drilling days and well costs thereby improving overall well economics."

Marathon holds approximately 30,000 net acres in the expanding Woodford Shale resource play with approximately 10,000 of those net acres in the immediate Brickyard prospect area. The Company is currently drilling two additional company-operated wells and is participating in two non-operated wells in the Brickyard prospect. Marathon also plans to participate in 15 to 25 gross wells in this area through 2010 with an anticipated 50 percent overall working interest. This limited program is designed to enhance the company's technical understanding of the play and reflects the company's focus on capital discipline. Marathon expects that with the successful development of this program, the play could yield an additional 200 to 300 gross locations.

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