Thursday, November 10, 2011

Preston County, WV Marcellus Shale


November 10, 2011 - Gastar Exploration Ltd (GST) recently reported on their Preston County, WV acreage in the Marcellus Shale.

On our Marcellus East position in Preston County, West Virginia, we have drilled one horizontal well to test this acreage, which is 100% owned by Gastar. In August 2011, we completed the Hickory Ridge 2H horizontal Marcellus well, a 2,500-foot lateral completed with a 10-stage fracture stimulation, and we are currently flowing back completion fluids. First sales from the Hickory Ridge 2H are anticipated by year end. Our focus for the remainder of 2011 and through 2012 in the Marcellus East acquisition area is to perform a 3-D seismic survey over a portion of the acreage, with no additional wells currently planned during that time frame.

PDC Energy (PETD) - Utica Shale Ohio News


November 10, 2011 - Petroleum Development Corporation (dba PDC Energy) (Nasdaq:PETD) recently announced that they are involved in the Utica Shale. The Utica Shale is really heating up in the oil window of the field which is located in Ohio.

PDC has acquired the rights for up to 40,000 net acres in the Utica shale play in southeastern Ohio for approximately $70 million. The Company plans to fund $14 million in 2011 and expects the remaining $56 million to be funded in 2012.

James Trimble, President and Chief Executive Officer, stated, "Our third quarter results were strong, and from a business development perspective we were particularly pleased. We acquired the rights of up to 40,000 net acres in the Utica Shale play in southeastern Ohio, we announced PDCM's acquisition of 90,000 acres prospective for the Marcellus Shale in West Virginia, and we announced the planned divestitures of our NECO, Permian basin and certain non-core assets. We engaged in a process to secure a joint venture partner in the Utica Shale play. Proceeds generated from the anticipated asset divestitures and the successful conscription of a joint venture partner will be utilized to strengthen our balance sheet, improve our liquidity position, and fund a portion of our 2012 developmental capital program. We expect our divestitures to occur in the fourth quarter of 2011 and the first quarter 2012."


Wednesday, November 9, 2011

Vaca Muerta Shale - Argentina Oil Shale Discovery


November 9, 2011 - There was a huge oil discovery this week in Argentina in the Vaca Muerta Shale. The Vaca Muerta Shale is said to have some of the same characteristics as the Eagle Ford Shale in Texas. EOG Resources (EOG) recently provided an update on this formation play.

"Before I close out the oil play discussion, I'll mentioned timing regarding our Argentina Vaca Muerta shale play, where we have approximately 100,000 net acres. We'll start our first well in the first quarter 2012, though we should have some results by late 2012." "We've got a well planned in the first part of next year. And the section we're targeting there, we've got data that shows that it's relatively thick, about 900 feet thick, and it's got about 150 million barrels per section of oil in place. So it's certainly a world-class potential rock.

Earlier this week, Repsol YPF SA said they plan to produce 50,000 barrels of oil from the Vaca Muerta Shale starting in 2014-2015. YPF announced Monday the potential of 927 million barrels of unconventional oil in Argentina's Neuquen Province, where the Vaca Muerta shale is located.



McKenzie County, ND - Bakken Shale


November 9, 2011 - Kodiak Oil & Gas (KOG) recently gave an update on their
McKenzie County North Dakota Bakken Shale and Three Forks Play. Kodiak Oil & Gas (KOG) is one of the up and coming exploration companies in the Bakken Shale due to their aggressive mineral rights leasing binge.

Kodiak’s five operated drilling rigs are presently drilling ahead on multi-well drilling pads. Three rigs are drilling in McKenzie County, and two rigs are drilling in Dunn County.

For the remainder of the fourth quarter 2011, Kodiak expects to complete or commence completion operations on an additional nine gross (6.1 net) operated wells, including two gross (0.8 net) wells from the recent acquisition. These operated wells are located on four drilling pads consisting of three, two-well pads and one, three-well pad. Drilling has been completed and operations are underway to construct surface equipment and pipelines on each of the pads. Currently, two gross (0.8 net) wells have been completed and are in flow-back operations. The remaining seven gross (6.6 net) wells are expected to commence completion operations during the remainder of the fourth quarter.

“We continue to make excellent wells in both Dunn and McKenzie Counties, which are integral to our production and cash flow growth trajectory we intend to provide our shareholders. One particularly positive development is the continued strong production profile from our first Three Forks well located in the McKenzie County Koala Project area. As shown above through the first 90 days of production, the well averaged nearly 1,000 BOE/d and is mirroring the offsetting Bakken well drilled just 700 feet away. With additional Three Forks production data, we can provide more accurate estimated ultimate recoveries for the Three Forks in the Koala area. We will also closely monitor the production profile from our two recent Dunn County Three Forks completions which have generated encouraging results.





Range Resources (RRC) - Utica Shale


November 9, 2011 - Range Resources (RRC) recently gave some comments about It's Utica Shale . The Utica Shale has been one of the top shale plays in North America lately as Oil & Gas companies scramble to acquire mineral rights in Ohio and Pennsylvania.

"In the Utica Shale, we'll spud our next well in the second quarter of 2012. Industry has drilled and will be drilling several Utica wells. Results of some of these wells will help us to delineate Range's acreage. A lot of our acreage is perspective for both the Upper Devonian and Utica shale. We hold all depth rights on our fairway acreage, so as we focus on driving up reserves and production in the low-risk highly economic Marcellus play, we'll hold the Upper Devonian and Utica potential both above and below the Marcellus. As we better understand the other 2 horizons with time, we'll then determine the optimum plan for each horizon."



Kodiak Oil & Gas Corp (KOG) - Bakken Shale

By Tim - http://oilshalegas.com

November 9, 2011 - Kodiak Oil & Gas (KOG) recently announced an update on the Bakken Shale. Kodiak Oil & Gas (KOG) drilling for oil in McKenzie County, ND & Dunn County North Dakota. I have a 2012 price target on KOG stock located at $9-$11 per share.

Kodiak Oil & Gas (KOG) took delivery of its fifth operated rig in early October. Kodiak's five operated drilling rigs are presently drilling ahead on multi-well drilling pads, with three rigs in McKenzie County, N.D. and two in Dunn County, N.D.

During September and continuing into early October, Kodiak completed five gross (four net) operated wells, bringing total third quarter completions on operated wells to seven gross (five net) wells. Initial production results from the wells completed in September and October are included in the table below. The results from wells completed earlier in the third quarter have previously been released.

For the remainder of the fourth quarter 2011, Kodiak expects to complete or commence completion operations on an additional seven gross (six net) operated wells in the Williston Basin. These operated wells are located on three drilling pads consisting of two, two-well pads and one, three-well pad. Drilling has been completed and operations are underway to construct surface equipment, with completion operations scheduled within the next thirty days.

In addition to its operated wells, the Company has participated in completion of five gross (2.5 net) non-operated wells under its area of mutual interest (AMI) with its partner in Dunn County, N.D. Initial production results from the completed wells are included below. Drilling activity continues with three gross (1.5 net) wells drilled and waiting on completion and two gross (1.0 net) wells drilling. Non-operated drilling and completion activities within the AMI are expected to continue throughout the fourth quarter and into 2012.



Marshall County, West Virginia - Marcellus Shale


November 9, 2011 - Gastar Exploration Ltd (GST) recently reported on their Marshall County, WV acreage in the Marcellus Shale.

In Marshall County, West Virginia, we currently have two drilling rigs working in our Marcellus West area. By year-end 2011, we expect to have nine horizontal Marcellus wells on sales and 10 horizontal Marcellus wells drilled and awaiting completion. All of our Marcellus Shale wells drilled in Marshall County are part of our joint venture with Atinum Partners Co, Ltd. (the "Atinum Joint Venture"). After all drilling and completion costs have been incurred, our working interest in these wells will range from 40% to 50%.

In mid-August 2011, we began producing the Wengerd 1H and 7H horizontal wells at an initial combined 30-day average gross sales rate of approximately 7.1 MMcf per day of natural gas, 176 barrels of condensate and 347 barrels of natural gas liquids (“NGLs”). On September 23, 2011, the pipeline operator shut in the pipeline due to weather-related damage to the natural gas and condensate gathering system. While the pipeline was being repaired, we installed tubing into the two Wengerd wells that would enable us to improve NGLs and condensate recovery and returned them to production on October 21, 2011. Initially, production was restricted due to excessively high line pressures following the pipeline repair, but this matter was recently resolved. The two wells’ most recent combined four day average gross sales rate is 8.1 MMcf per day of natural gas, 200 barrels of condensate per day and 490 barrels of NGLs per day.

Also in Marshall County, we have completed fracture stimulation operations on the Corley pad (four horizontal wells), with first sales anticipated in mid-November 2011. Currently, we are commencing fracture stimulation operations on the three-well Simms pad with first production anticipated mid-December 2011. As of September 30, 2011, drilling operations have been completed on the Hendrickson 1H, 2H and 4H wells, and we completed drilling operations on the Hendrickson 3H and 5H wells in late October 2011. Fracture stimulation operations on all five Hendrickson wells are anticipated to commence in March 2012, and first sales are anticipated in the second quarter of 2012. Currently, we have commenced drilling operations from the Hall pad (three wells) and the Burch Ridge pad (five wells), and we expect to commence drilling operations on the Accettolo pad (three wells) prior to year end.



Tuesday, November 8, 2011

Dunn County, North Dakota Bakken Shale


November 8, 2011 - Kodiak Oil & Gas (KOG) recently gave an update on their Dunn County, North Dakota Bakken Shale and Three Forks Play. Kodiak Oil & Gas (KOG) is one of the up and coming exploration companies in the Bakken Shale due to their aggressive mineral rights leasing binge.

Kodiak’s five operated drilling rigs are presently drilling ahead on multi-well drilling pads. Three rigs are drilling in McKenzie County, and two rigs are drilling in Dunn County.

For the remainder of the fourth quarter 2011, Kodiak expects to complete or commence completion operations on an additional nine gross (6.1 net) operated wells, including two gross (0.8 net) wells from the recent acquisition. These operated wells are located on four drilling pads consisting of three, two-well pads and one, three-well pad. Drilling has been completed and operations are underway to construct surface equipment and pipelines on each of the pads. Currently, two gross (0.8 net) wells have been completed and are in flow-back operations. The remaining seven gross (6.6 net) wells are expected to commence completion operations during the remainder of the fourth quarter.

“We continue to make excellent wells in both Dunn and McKenzie Counties, which are integral to our production and cash flow growth trajectory we intend to provide our shareholders. One particularly positive development is the continued strong production profile from our first Three Forks well located in the McKenzie County Koala Project area. As shown above through the first 90 days of production, the well averaged nearly 1,000 BOE/d and is mirroring the offsetting Bakken well drilled just 700 feet away. With additional Three Forks production data, we can provide more accurate estimated ultimate recoveries for the Three Forks in the Koala area. We will also closely monitor the production profile from our two recent Dunn County Three Forks completions which have generated encouraging results.



Rex Energy (REXX) - Utica Shale


November 8, 2011 - Rex Energy (REXX) recently gave some comments about It's Utica Shale Oil Field located in Ohio, specifically, Carroll County. It appears the Carroll County area in Ohio is the "sweet spot" of the Utica Oil Shale window.

"On Slide 14, we have our Utica Shale overview. To date, we have a total of approximately 85,300 gross, 58,700 net acres perspective in this area for the Utica Shale. Chesapeake Energy has recently disclosed well results for 4 wells in their Utica Shale program, 3 of which are in close proximity to our Carroll County, Ohio acreage position. Locations and production rates for these wells are shown on the graph. As more production rates are disclosed, we feel confident that our Butler County acreage will be in the dry gas window and that all of our acreage in Carroll County, Ohio will be at ground 0 for the liquids rich condensate window."



Butler County, PA - Utica Shale - Rex Energy (REXX)


November 8, 2011 - Rex Energy (REXX) recently gave an update on their Butler County, PA Utica Shale acreage. The Utica Shale is an oil field in Ohio and a Natural Gas Field in Pennsylvania.

In Butler County, we have also completed our first horizontal Utica Shale test well, the Cheeseman #1H. The well flowed at a 24-hour test rate of 9.2 million cubic feet of dry gas per day. The well is currently shut in and is expected to be placed in service in January of 2012


Chesapeake Energy (CHK) -Tuscaloosa Marine Shale


November 8, 2011 - Chesapeake Energy (CHK) said in their last conference call that they will not be chasing land acreage in the Tuscaloosa Marine Shale. Chesapeake Energy (CHK) said that based on what they are seeing, mineral rights are to expensive in the Tuscaloosa Marine Shale. They also stated that they will not be chasing anything in California such as the Elm County Field or the Monterey Shale.

The Tuscaloosa Marine Shale has been hitting the news lately on some nice oil wells being drilled. The Tuscaloosa Marine Shale is located in south Louisiana and Mississippi.



Monday, November 7, 2011

Bakken Shale Record Oil Well - McKenzie County, ND


November 7, 2011 - Whiting Petroleum (WLL) recently announced a new Bakken Shale record on a recent well that they've drilled. This Bakken Shale gusher was drilled in McKenzie County, North Dakota.

New Discovery at Tarpon Prospect Flows at Williston Basin Bakken Record Initial Rate of 7,009 BOE/D (4,815 BO/D and 13,163 MCF/D) on Full 24-Hour Test.

Tarpon Prospect. "Whiting has set a new initial production record for all Bakken wells drilled in the Williston Basin. The Tarpon Federal 21-4H well was completed in the Middle Bakken (after a 30 stage sliding sleeve frac job) flowing 4,815 barrels of oil and 13,163 Mcf of gas (7,009 BOE) per day on October 17, 2011. The Company owns a 56% working interest and a 45% net revenue interest in the Tarpon well. Whiting drilling engineers also set a new Tarpon Prospect area record by drilling this well to total depth in 13.3 days. We expect the completed well cost to be $6.35 million. Whiting holds 8,125 gross (6,265 net) acres at the Tarpon prospect, which is located in McKenzie County, North Dakota. Whiting has controlling interests in four 1,280-acre Tarpon prospect spacing units. We have the potential to drill a total of 12 Middle Bakken and eight Three Forks wells in these units. Based on our drilling to date, we believe 100% of the prospect is now drillable for the Middle Bakken and de-risked. Please see the Tarpon map in our corporate presentation."


Eagle Ford Shale - Price Cost Per Acre - Mineral Rights Leases


November 7, 2011 - Whiting Petroleum (WLL) recently announced some good Eagle Ford Shale mineral rights leasing data. They sold 3,532 Eagle Ford Shale acres in Karnes County, Live Oak County, and DeWitt County Texas for a total of $66.4 Million.

Prospective Eagle Ford Acreage Sold for $66.4 Million, $12,542 per Net Acre

"During the third quarter, Whiting sold approximately 3,532 net leasehold acres prospective for oil and gas production from the Eagle Ford formation in Karnes, Live Oak and Dewitt Counties, Texas for a total cash consideration of $66.4 million before closing adjustments. The transaction, which was effective July 1, 2011, closed on September 29, 2011. Whiting used the net proceeds from the property sale to reduce the amount drawn under its Credit Agreement.

The non-core acreage sold is located in Kawitt, Nordheim and Three Rivers Fields, which produce from the Speary, Edwards, Wilcox and Eagle Ford formations. Recent net daily production was approximately 4.0 MMcfe from 33 producing wells. The property sale also included 16 shut-in and temporarily abandoned wells. The estimated proved net reserves associated with the producing properties were 1.1 MMBOE. Whiting valued the existing production in the transaction at $22.1 million net of plugging liabilities and the acreage at $44.3 million net of the production value, or approximately $12,542 per net acre."



Columbia County Arkansas - Smackover Brown Dense Shale


November 7, 2011 - Southwestern Energy (SWN) provided a drilling update on the Smackover Brown Dense Formation located in Arkansas and North Louisiana. The lower Smackover and Brown Dense formations have been a hot topic lately due to the huge oil potential. There are multiple zones that have a chance to produce both oil and natural gas. The Smackover Brown Dense play will be a hot shale field in 2012 so stay tuned. Southwestern Energy (SWN) had this to say about the find.

"Included in the approximately 948,000 net acres are 487,000 net acres located in the Lower Smackover Brown Dense formation, an unconventional oil reservoir found in southern Arkansas and northern Louisiana. The company spud its first well in September, the Roberson 18-19 #1-15H located in Columbia County, Arkansas, and is currently drilling the lateral portion of the well. This well has a vertical depth of approximately 9,200 feet and a planned horizontal lateral length of 4,000 feet. The well is expected to be completed in November. The company will spud its second well, the Garrett 7-23-5H #1 located in Claiborne Parish, Louisiana in November. This well has a planned total vertical depth of approximately 10,700 feet and a planned 7,900-foot horizontal lateral. The company plans to drill up to 8 additional wells as we continue to test the concept in 2012. If the company's drilling program yields positive results, it expects that activity in the play could increase significantly over the next several years."


Sunday, November 6, 2011

Alberta Canada Oil Shale - Exshaw Shale


November 7, 2011 - Murphy Oil (MUR) recently gave an update on the Exshaw Shale Oil Field located in Southern Alberta Canada. The Exshaw Shale is an emerging oil field in Canada which also extends down into Montana.

"In Southern Alberta, our Exshaw Bakken appraisal program has completed the first phase. We have drilled a total of 6 wells, the last well is awaiting completion, 2 wells are showing productive capability in line with expectations, 1 well is producing at very low rates and 2 wells are shut in to evaluate. Overall, production results from the first phase of wells have been mixed, and we continue to evaluate the play to identify sweet spots and areas for improvement.


Utica Shale - Anadarko Petroleum (APC) - Ohio


November 7, 2011 - The Utica Shale continues to heat up! Anadarko Petroleum (APC) recently announced in their earnings report that they've added 300,000 acres of mineral rights in the Utica Shale (Ohio). Anadarko Petroleum (APC) is after the oil in this shale play.

"Additionally, in the U.S. onshore, we've been assembling a position in Ohio's Utica Shale, and over time, we have acquired interests in approximately 300,000 gross acres in the prospective liquids-rich window at attractive entry costs. We've recently spud our first well in the play and look forward to an active drilling program in this emerging area."


Bakken Shale - Kodiak Oil & Gas (KOG)


November 6, 2011 - Kodiak Oil & Gas (KOG) recently gave an update on the Bakken Shale and Three Forks Play. Kodiak Oil & Gas (KOG) is one of the up and coming exploration companies in the Bakken Shale due to their aggressive mineral rights leasing binge.

Kodiak’s five operated drilling rigs are presently drilling ahead on multi-well drilling pads. Three rigs are drilling in McKenzie County, and two rigs are drilling in Dunn County.

For the remainder of the fourth quarter 2011, Kodiak expects to complete or commence completion operations on an additional nine gross (6.1 net) operated wells, including two gross (0.8 net) wells from the recent acquisition. These operated wells are located on four drilling pads consisting of three, two-well pads and one, three-well pad. Drilling has been completed and operations are underway to construct surface equipment and pipelines on each of the pads. Currently, two gross (0.8 net) wells have been completed and are in flow-back operations. The remaining seven gross (6.6 net) wells are expected to commence completion operations during the remainder of the fourth quarter.

“We continue to make excellent wells in both Dunn and McKenzie Counties, which are integral to our production and cash flow growth trajectory we intend to provide our shareholders. One particularly positive development is the continued strong production profile from our first Three Forks well located in the McKenzie County Koala Project area. As shown above through the first 90 days of production, the well averaged nearly 1,000 BOE/d and is mirroring the offsetting Bakken well drilled just 700 feet away. With additional Three Forks production data, we can provide more accurate estimated ultimate recoveries for the Three Forks in the Koala area. We will also closely monitor the production profile from our two recent Dunn County Three Forks completions which have generated encouraging results.



Eagle Ford Shale - LaSalle Frio County Texas Oil Wells


November 6, 2011 - The Eagle Ford Shale continues to produce some nice oil wells as we head into 2012. Goodrich Petroleum (GDP) recently reported some of their oil well data which you will see below. These Eagle Ford Shale wells are located in LaSalle County, TX & Frio County, TX.

Eagle Ford Shale, LaSalle and Frio Counties, Texas

The Company completed the following five Eagle Ford Shale wells during the quarter, with an average 24-hour peak production rate of 907 BOE per day:

  • Burns Ranch 20H (67% WI), a 5,960 foot lateral with 21 frac stages, at a 24-hour peak production rate of 1,080 barrels oil equivalent ("BOE") per day;
  • Burns Ranch 2H (67% WI), an 8,320 foot lateral with 29 frac stages, at a 24-hour peak production rate of 1,004 BOE per day;
  • Burns Ranch 3H (67% WI), a 5,160 foot lateral with 19 frac stages, at a 24-hour peak production rate of 953 BOE per day;
  • Burns Ranch 18H (67% WI), a 5,060 foot lateral with 19 frac stages, at a 24-hour peak production rate of 883 BOE per day;
  • Burns Ranch 19H (67% WI), a 5,940 foot lateral with 21 frac stages, at a 24-hour peak production rate of 613 BOE per day.

The Company completed two additional Buda Lime wells in the quarter:

  • Carnes 7H (65% WI), an un-stimulated 4,215 foot lateral, at a 24-hour peak production rate of 1,167 BOE per day and a 30-day average of 871 BOE per day (762 BO and 655 Mcf per day);
  • Burns Ranch 30H (67% WI), a 5,060 foot lateral with 19 frac stages, at a 24-hour peak production rate of 500 BOE per day.

The Company is in completion phase on the following wells:

  • Burns Ranch 35H (67% WI), an 8,880 foot lateral with 32 planned frac stages;
  • Burns Ranch 16H (67% WI), a 5,710 foot lateral with 20 planned frac stages;
  • Burns Ranch 22H (67% WI), a 5,520 foot lateral with 20 planned frac stages;
  • Shiner G-1 (67% WI), a 4,190 foot lateral in the Buda Lime;
  • Shiner G-4 (67% WI), a 4,130 foot lateral in the Buda Lime;


Cardium Shale - Devon Energy (DVN) Hits Oil in Canada


November 6, 2011 - Devon Energy (DVN) has released an update on drilling in the Cardium Shale located in Canada. The Cardium Shale is an emerging oil shale play which we will start to hear more about in the coming years, especially if oil prices hit record highs.

Cardium Shale wells produce 770 BOE per day

"Also in Canada, Devon completed 19 exploration wells targeting oil and liquids-rich opportunities across its more than 4 million net acres in the Western Canadian Sedimentary Basin. The company tied in 10 of these wells to production in the third quarter. This activity was highlighted by results in the Ferrier area where the company commenced production on three Cardium wells with initial production averaging 770 Boe per day per well."


Continental Resources (CLR) - Bakken Shale


November 6, 2011 - Continental Resources, Inc. (NYSE:CLR) recently gave an update on the Bakken Shale and Three Forks Play. Continental Resources, Inc. (CLR) is the leader in the Bakken Formation with over 900,000 acres of mineral rights leases.

The Company successfully completed the Charlotte 2-22H (91% WI) in McKenzie County, North Dakota, in October 2011, with the well producing 1,140 gross Boepd in its initial one-day test period. This is the Company's first horizontal test of a deeper bench in the Three Forks formation.

In terms of Company-operated wells, Continental completed 46 gross (24.5 net) wells in the Bakken in the third quarter. Average initial one-day test period production was 1,096 Boepd for the Company's operated wells in the third quarter. The Company currently has 45 gross operated wells in various stages of completion. Of these, 20 are scheduled to be fracture-stimulated, and 25 have been fracked and are being readied to go into production.



Saturday, November 5, 2011

Woodford Shale - Exxon Mobil (XOM)


November 5, 2011 - Exxon Mobile (XOM) is now heavily involved in the Woodford Shale as of late 2011. The Woodford Shale and Cana Woodford Shale have been explored by many companies for oil in 2011. Oklahoma residents have been signing away mineral rights leases at a record pace. Exxon Mobile (XOM) had this to say about the Woodford Formation.

"We are also involved in multiple emerging liquids-rich shale plays, the most active of which is the Woodford shale in the southern Oklahoma Ardmore Basin area. To date, we have amassed more than 150,000 net acres in this play through an aggressive leasing and acquisitions program. This leadership position has been built at an attractive cost. As we acquired resources for approximately $0.30 per 1,000 cubic feet equivalent and added the leasehold for under $600 per acre.Our activity in the Woodford Ardmore play has ramped up significantly in 2011, with our operated rig count increasing from 3 to 7 rigs and gross operated production more than tripling since year-end 2010.

In our core development area, peak 7-day gross production rates have averaged 325 barrels per day of crude oil and 3.7 million cubic feet per day of natural gas, with a rich 1,275 BTU gas also yielding significant natural gas liquids, providing an average liquids rate per well of over 750 barrels per day and 2.9 million cubic feet per day of sales gas. We are continuing to ramp up drilling activity and are progressing both marketing and infrastructure plans for the play.




Smackover Brown Dense Formation - Lower Smackover Shale


November 5, 2011 - Southwestern Energy (SWN) provided a drilling update on the Smackover Brown Dense Formation located in Arkansas and North Louisiana. The lower Smackover and Brown Dense formations have been a hot topic lately due to the huge oil potential. There are multiple zones that have a chance to produce both oil and natural gas. The Smackover Brown Dense play will be a hot shale field in 2012 so stay tuned. Southwestern Energy (SWN) had this to say about the find.

"Included in the approximately 948,000 net acres are 487,000 net acres located in the Lower Smackover Brown Dense formation, an unconventional oil reservoir found in southern Arkansas and northern Louisiana. The company spud its first well in September, the Roberson 18-19 #1-15H located in Columbia County, Arkansas, and is currently drilling the lateral portion of the well. This well has a vertical depth of approximately 9,200 feet and a planned horizontal lateral length of 4,000 feet. The well is expected to be completed in November. The company will spud its second well, the Garrett 7-23-5H #1 located in Claiborne Parish, Louisiana in November. This well has a planned total vertical depth of approximately 10,700 feet and a planned 7,900-foot horizontal lateral. The company plans to drill up to 8 additional wells as we continue to test the concept in 2012. If the company's drilling program yields positive results, it expects that activity in the play could increase significantly over the next several years."


Exxon Mobil (XOM) - Utica Shale


November 5, 2011 - Exxon Mobile (XOM) recently disclosed that they are involved in the Utica Shale. The Utica Shale, located mainly in Ohio, is an oil & natural gas field that has been moving up on the Top 5 shale plays. Exxon Mobile (XOM) said this about their Utica Shale acreage.

"Exxon Mobil is also actively exploring several other early stage liquids-rich play in the United States, including the Utica Shale play in eastern Ohio and western Pennsylvania. Our position in the Utica stems from our recently completed acquisition of the Phillips companies and represents incremental upside to the Phillips acquisition, which was focused on the Marcellus. The Phillips acquisition included 45,000 net acres prospective for the Utica in Ohio, and we have increased our position now to over 75,000 net acres. We anticipate drilling our first Utica well in early 2012."

Shale News

OilShaleGas.com

Friday, November 4, 2011

Utica Shale - Chesapeake Energy (CHK) Joint Venture


November 4, 2011 - Chesapeake Energy (CHK) announced major Utica Shale news last night in the form of a joint venture (JV). Chesapeake Energy (CHK) Announces Utica Shale Joint Venture and Utica Shale Financial Investment with Potential Combined Proceeds Net to Chesapeake of Approximately $3.4 Billion. This is the largest deal to date in the Utica Shale and is a sign of things to come!

JV Transaction Values 570,000 Net Acres of Chesapeake Utica Shale Leasehold at $8.55 Billion, or $15,000 Per Net Acre

Financial Transaction Provides up to $1.25 Billion to Accelerate Drilling Across All Phases of Chesapeake’s Utica Acreage, Including Dry Gas and Oil Areas

Chesapeake Energy Corporation (NYSE:CHK) today announced two transactions to monetize a portion of its 1.5 million net acres of leasehold in the Utica Shale play primarily in eastern Ohio. Fully implemented, the transactions would result in consideration to Chesapeake of approximately $3.4 billion.

Chesapeake has entered into a letter of intent (“LOI”) with an undisclosed international major energy company for an industry joint venture (“JV”) through which the JV partner will acquire an undivided 25% interest in approximately 650,000 net acres of leasehold in the wet natural gas area of the Utica Shale play. Of this acreage, approximately 570,000 net acres are owned by Chesapeake, and approximately 80,000 net acres are owned by Houston-based EnerVest, Ltd. and its affiliates (“EnerVest”). The JV area covers all or a portion of 10 counties in eastern Ohio (the “JV AMI”). The consideration for the transaction will be $15,000 per net acre, or approximately $2.14 billion to Chesapeake and approximately $300 million to EnerVest. Approximately $640 million of the consideration to Chesapeake will be paid in cash at closing, and approximately $1.5 billion will be paid in the form of a drilling and completion cost carry, which Chesapeake anticipates fully receiving by year-end 2014.

Chesapeake will serve as the operator of the JV and will conduct all leasing, drilling, completion, operations and marketing activities for the project. The LOI provides that the JV partner will have the option to acquire a 25% share of all additional acreage acquired by Chesapeake in the JV AMI and the option to participate with Chesapeake for a 25% interest in midstream infrastructure related to production generated from the assets. The LOI provides for the execution of definitive transaction documents and closing by mid-December 2011.

Additionally, as a first step in a financial transaction led by EIG Global Energy Partners (“EIG”), Chesapeake has completed the sale to EIG of $500 million of perpetual preferred shares of a newly formed entity, CHK Utica, L.L.C. Chesapeake expects to sell up to $750 million of additional CHK Utica preferred shares to other investors, including limited partners of EIG, by November 30, 2011. CHK Utica is a wholly owned, unrestricted subsidiary of Chesapeake that owns approximately 700,000 net leasehold acres within an area of mutual interest in the Utica Shale play in 13 counties primarily in eastern Ohio (the “CHKU AMI”) that encompasses the JV AMI. Chesapeake has retained all the common interests in CHK Utica.

The CHK Utica preferred shares are entitled to receive an initial annual distribution of 7%, payable quarterly. Chesapeake retains an option exercisable prior to October 31, 2018 to repurchase the preferred shares for cash in whole or in part at any time at a valuation expected to equal the greater of a 10% internal rate of return or a return on investment of 1.4x. Assuming a total of $1.25 billion of CHK Utica preferred shares are purchased, investors in CHK Utica preferred shares will also receive a 3% overriding royalty interest in the first 1,500 net wells drilled on CHK Utica’s leasehold, which is the equivalent of an approximate 0.45% overriding royalty interest across Chesapeake’s projected 10,000 net well inventory. Chesapeake’s average net revenue interest on its Utica Shale leasehold is approximately 83%, which compares favorably to net revenue interests in the Haynesville, Barnett and Eagle Ford shale plays of approximately 75%.

As part of the financial transaction, Chesapeake has committed to drill a minimum of 50 net wells per year through 2016 in the CHKU AMI, up to a minimum cumulative total of 250 net wells, for the benefit of CHK Utica. Chesapeake believes it will have considerable operating and financial flexibility in fulfilling the drilling commitment because the company’s planned Utica Shale drilling program for the years ahead involves a significantly higher rig count than the approximate 10-rig drilling program required by the terms of the CHK Utica preferred shares investment.




Thursday, November 3, 2011

Tuscaloosa Marine Shale - Encana (ECA) - Amite County, MS

By Tim - http://oilshalegas.com

The Tuscaloosa Marine Shale is located in southern Louisiana as well as southwestern Mississippi. This emerging shale play is catching the eye of drilling companies due to the oil potential there. Could the Tuscaloosa Marine Shale find be a mini Eagle Ford Shale ? Only time will tell! One thing I like to do is to buy the stocks in these new shale fields, especially when they have a huge stake in the discovery. Encana (ECA) is the stock you will want to watch. Encana has over 270,000 acres in the Tuscaloosa Marine Trend and they have already hit a 30 day initial rate of 310 barrels of oil in Amite County, MS. Stay Tuned for more details!

http://www.oilshalegas.com/tuscaloosamarineshale.html