extracts from the petrohawk earnings and conference call
fair bit of talk on the eagleford. and some interesting questions..
http://seekingalpha.com/article/154...tion-q2-2009-earnings-call-transcript?page=-1
Floyd Wilson - Chairman, President and CEO
......
Another ongoing important activity in our combined evaluation of the Eagle Fort Shale in South Texas – that is another important activity. We have taken what we have learned at Hawkville, our discovery in South Texas, which ignited the entire Eagle Fort Shale play, you know began to evaluate other areas in that region that looked to us to be perspective.
More on that from Dick in a minute. Anyone that has followed Petrohawk knows that our business view is a multi-year view and conservative financial view that supports our expansion in existing and new areas, our priorities are significant production growth and reserve growth, paid with low operating costs, or active hedging program and our ever present attempt and successful I should say to gain technical advantages and efficiencies, which improve over time in these large scale resource plays.
We expect what is good to get even better and we're conservative managers of our capital structure. I will turn the call now over to Mark Mize to discuss our financial performance.
Dick Stoneburner
......... In the Eagle Ford, we operated two horizontal rigs, drilled six operated wells, and one non-operated well, and put three of the operated wells on production, resulting in 140% increase in production from 5 million a day to 12 million a day
Switching to the discussion of the Eagle Ford Shale trend, our excellent results in the Hawkville Field continue to support the belief that this discrete geological area appears to be a highly commercial field. The company drove drilled six wells in the quarter and completed three of them at an average IP rate of 9.3 million per day.
Similar to the Haynesville production practices, these IP rates where all obtained by producing the wells at a maximum rate on a 24/64 choke with average flowing casing pressure of almost 4,200 pounds. Additionally, we completed the J.C. Martin well in mid-July at a rate of 8.8 million a day and 50 barrels of condensate on the 24/64 choke with 3,710 pounds for casing pressure.
This brings the total number of wells on production to eight of which seven have been on production for at least 30 days. The average rate of those wells based on a 621 Gascon estate ratio was 6 million a day and it was 6.9 million a day when calculated using an 18 to 1 gas to and condensate ratio and using the appropriate BTU adjustment.
Additionally, a few of the wells experienced some curtailment during the first 30 days, in which case the normalized 30 day average using conventional gas ratios against condensate ratios were 6.6 million per day and 7.6 million per day, when using the higher ratio assumption.
While there is not sufficient production history to utilize the time zero EUR forecasting method that we presented earlier on the Haynesville wells, we are very encouraged with performance of the wells to date and confirm the belief that the EUR range should be in the 4 to 7 Bcf range.
The economics of the fields have been greatly enhanced by the dramatic decrease in well cost.
At the end of the second quarter, we had drilled six wells without intermediate casing, without drilling a pilot hole. Those wells have averaged reaching total measured depth of approximately 16,000 feet in 18 days from spud, which is a result in an average cost to rig release of $2.4 million.
Combine that with a significant reduction in service costs, specifically pumping services and the result is total well costs that are averaging slightly less than $5 million. Similar to the Haynesville, we have been varying certain aspects of our frac jobs, in order to optimize the cost versus benefit ratio.
The most significant change within a significant increase in the number of stages. The last two wells that we have fraced, we have pumped 18 stages. This has decreased the average stage link in these wells to approximately 245 feet with eight per clusters per stage that are approximately 30 feet apart. While it is too early to determine whether this project will be more effective, there does appear to be evidence of a flatter decline curve in early data, which could have significant impact on the EUR.
While we have focused the majority of our efforts to date in the area of the Hawkville field, we have been actively putting our geological experience to work in identifying areas and the trend that appeared to have rough quality, similar to what we have found at Hawkville.
These efforts have resulted in obtaining leases in several additional perspective areas in both the up-dip and mid-dip areas of the field. This leasing along with additional leases acquired in Hawkville has increased our net leasehold position to approximately 210,000 acres.
Lastly, regarding the Fayetteville Shale, we have intentionally decreased our operated focus in the Fayetteville Shale, in order to ensure that timing development of our leasehold and Hayneville and Eagle Ford. As recently as the middle of the fourth quarter of 2008, we were operating 11 horizontal rigs in the field.
But have now decreased that to two rigs. However, due to the increased level of activity and exceptional operational results of our non-operative partners, we have been able to achieve steady and impressive production growth in the field. At the beginning of the year, our net production in the field was approximately 71 million a day and by the end of the second quarter it had grown to just over 80 million a day, or approximately 13% growth.
While we are still very positive about the opportunities set in the Fayetteville, we will continue to direct the majority of our capital expenditures to the Haynesville and Eagle Ford over the next two years as we develop our term leasehold in each field.
With that I will turn the call back over to Floyd.
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Michael Hall - Stifel Nicolaus
Okay, fair enough. If I one – if I may one more, can you come at all on the exploratory counties and the Eagle Ford and kind of which direction you are heading, is up-dip north or northeast any commentary there or color?
Floyd Wilson
I know Dick would really like to talk about that, but I'm going to hold him back. It is highly competitive if we have – been reviewing some areas that are both for reef and back reef up dip if you will and we are very specifically targeting some areas that have a geologic story rather than just acreage. Beyond that it is so competitive down there right now that we are just not going to comment too much.
Michael Hall - Stifel Nicolaus
Okay, kind of figured, but it was worth a try. Thanks gentlemen.
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Subash Chandra - Jefferies
Yes. Good morning. I guess the question is for Dick. I think, Dick, (inaudible) I saw in the presentation, you referred to permeability in Eagle Ford sort of over a thousand Anadar season [ph]. And I was curious if you’re seeing that pretty much everywhere or if you’re seeing some variety to the perm? And then secondly, is there a tipping point for too much liquids in the stream?
Dick Stoneburner
Regarding perm, Subash, we have two core available to us at this point. The third one’s still in analysis. I think the 1.1 was the higher of the two. But the other one was not too far behind it. Though it was probably – I can’t, off the top of my head. It wasn’t higher than. It wasn’t quite as high as, but it was close.
In terms of liquids, I don’t think so, Subash. For one, it’s a great revenue add. But you’re comment is probably more addressed to performance. And you know, in this type of rock with nano-perm and in a highly fractured network that we’ve induced, we don’t think – and peers that I’ve spoken to, whether it be Marcellus or other areas of the Eagle Ford, I don’t think anybody is seeing, number one, any detrimental effects to date, or expect any.
It’s just not the same type of situation in a conventional high-perm reservoir where you have a retrograde condensate reservoir. Any liquids that drop are nominal. And your fracture network has sufficient perm to deliver those liquids and gas without a change. That’s our opinion.
petrohawk claim to be the first in the eagleford and everyone else followed
what is positive is that they are seeing the play through now.. for a long time the general trend was to just explore, now we are seeing the likes of conocophillips and petrohawk start development wells in the region right along the trend
another petrohawk permit appreared for mcmullen yesterday
DONNELL 1086 1H
http://webapps.rrc.state.tx.us/DP/d...Query=Y&name=DONNELL+1086&univDocNo=485703438