Ann: Roundhouse Prospect , page-9

Cotton Valley Liquids Giving Life to the Haynesville
by Matt Menchaca on May 25th, 2012

The oil and gas industry is continuously growing in knowledge and practicing better, more efficient shale exploration methods. The technological byproducts involved have allowed E&P companies to target multiple zones and deeper rock units. These adjacent reservoirs are paying off substantially. The Three Forks Limestone, the Cline Shale, the Austin Chalk are all good examples, but now don’t forget the Cotton Valley.

First quarter E&P operator results have been released and I tried to keep an eye out for operators targeting the Cotton Valley. I also limited my focus on Texas since Louisiana Cotton Valley is pretty gassy. Here are a few notes taken from conference calls and quarterly transcripts.

Anadarko: With more than 300 MMBOE of net resources and 450 identified drilling locations, Anadarko is pioneering this liquids-rich play that includes wells in the Haynesville Shale and Cotton Valley areas. The play offers approximately 35% liquids with the majority of acreage HBP. The company said it has identified a net resource estimated at 300 MMBOE with more than 350 drillsites in the Haynesville shale and 100 in the Cotton Valley formation. The company plans to operate as many as eight rigs and drill 75 horizontal wells in 2012. They operated seven rigs in the first quarter.

Chevron: Chevron holds more than 70,000 net acres in the Haynesville Shale beneath mature conventional oil and gas fields. Chevron is also targeting the Travis Peak formation to further evaluate other rock layers in the area. Chevron is also participating with other companies in a large 3-D seismic survey, with results expected sometime this year. Chevron continued development of the Travis Peak oil and Cotton Valley gas reservoirs in East Texas using multiwell horizontal drilling projects.

Forest: Forest has around 123,000 net acres in the East Texas, North Louisiana Area. The company completed one horizontal Cotton Valley well in the first quarter in East Texas that had an average 24-hour initial production rate of 10.3 MMcfe/d, including 662 Bbls/d of oil and natural gas liquids or 39% of total equivalent production. They currently have two rigs running in this area and due to the current low natural gas price environment; Forest has redeployed the Haynesville rig to drill the liquids-rich Cotton Valley interval.

NFR Energy: A good company to watch in this play, has 140,000 net acres of which 80% is HBP. Last year, NFR shifted most their capital spending to the Cotton Valley to take advantage of the strong liquids component. The Company completed seven Cotton Valley horizontal wells in the fourth quarter of 2011. The seven Cotton Valley completions had an average 30 day initial production rate of 4.8 Mmcfe/d, an average EUR of 4.5 Bcfe, with drilling and completion costs of $7.8 million. The average NGL yield was 50 barrels/Mmcf and the average oil yield was 12 barrels/Mmcf. In December 2011, the Huff 9H came online and is the Company’s best Cotton Valley project to date. The well is currently producing at 6.5 Mmcfd, 230 bod oil, and 418 barrels/day NGLs.

Below are a couple of maps, generated with Drilling Info, showing some permit and production activity in the Cotton Valley and Travis Peak Formations.

I like the Travis Peak formation. It outcrops nicely in Burnet County and having closely examined the rock, it’s interesting to observe the production potential within. Stay connected to what’s happening in the Haynesville by clicking on Drilling Info’s DNA Haynesville folder.