Wednesday, February 29, 2012

Increasing Pressure On The Bit And Cranking Up The RPM's

A little tounge-in- cheek humor......but a lot of truth.  Don't shoot me, I'm just the messenger.

Drill, Barry, Drill

by John Ransom
So let’s you, me and the New York Times agree that Obama really doesn’t have an energy policy. Recently Obama reinforced that notion, when he tried to sell us on the idea that he's responsible for increased oil production. Please.
You see, Obama was against oil production before his newest, bestest policy, just recently embraced 72 hours ago, that- to paraphrase him- says: “Drill, Barry, drill.”
His change of heart , or lack thereof, has come about in wake of the administration’s latest self-inflicted gunshot wound to the economy, rising oil prices… again.

(Isn't it interesting, Mr. Bernanke, that the increasing price of oil coincides with the increasing money supply?  Quantitative easing or massive inflation?  I'll be thinking of you next time I fill my gas tank, or heaven forbid, plug in my electric vehicle.  Peter)

John Ransom

John Ransom

John Ransom is the Finance Editor for Townhall Finance. You can follow him on twitter @bamransom and on Facebook: bamransom.

Southwestern Energy (SWN): Venturing Into New Territory, Lower Smackover, Southern Arkansas

The following article is an unusually detailed and well-written description of an oil and gas company's exploration efforts in a new area.  In this case Southwestern Energy (SWN) has drilled a horizontal well into the Lower Smackover Brown Dense Zone, between two apparently water bearing zones.  They have hydraulicly fracked the well in multiple stages and are producing back frac fluid, oil and gas.

This represents a great success by my book, for an initial try, and they are far from done testing.  It tells me they know how to carefully and accurately drill and steer a well, and then successfully frac it.  However, apparently investors aren't as enthusiastic.  I think they are wrong.  Southwestern has an excellent track record.  This is a new play I'll be keeping my eye on.  We all should.

See the following article for a very good description of horizontal drilling and hydraulic fracturing in an exciting new oil play.  I only wish all oil companies were as open and generous with their operations as Southwestern is.  It would help the entire industry because in a way , we're all in this together and can learn from each other.  This kind of exploration play is different from the old super secretive "wildcatting" days.  Let's wish them the best.

Southwestern Energy - Street Proves Dense Regarding New Play


by Steve Zachritx
Yesterday, Southwestern Energy (SWN) released their first early results from the Lower Smackover Brown Dense play in southern Arkansas and northern Louisiana and the Street was less than impressed. Southwestern's first well, the Roberson 18-19 #1-15H in Columbia County, AR, is still recovering frac fluid and has been on production/flow back for 20 days with a best rate in a 24 hour period so far of 103 barrels of oil, 200 Mcf of gas and was at the time producing 1,009 barrels of water per day from 8 stages out of an 11 stage design.

  • To be clear, the 1,009 barrels of water production listed in SWN's press release for that same 24 hour period are:
    • Frac water, NOT formation water.
    • And definitely not water from the Smackover B wet zone above the Lower Smackover which had been an early concern here.
    • As the load water falls off (45% of load recovered as of yesterday) the oil production has come up as expected but the well is still in the process of cleaning up and this may take 10 more days or it could take another month or two. This is their first well in the play and they don't know exactly how frac load recovery will behave.
    • At this point there is no point in venturing a guess at a stabilized oil production rate. People shouldn't think of this "IP" as "initial production" but rather as an "in progress" rate.
(continued here)

About the author:
Steve Zachritz, "Zman", is an investor/trader who specializes in the energy sector. He has managed small cap growth portfolios, been an energy banker, and a sell side exploration and production analyst (Prudential and Jefferies) in his 20 years in the financial markets. His daily writeups address developments in that sector and the potential impact on publicly traded stocks, options, and futures.

Visit his site: Zman's Energy Brain