Get In The Oil Business: Making Money From A Distance With The Bakken

I've been following Michael Filloon for a couple of years and he provides some very good, and I think accurate information.  I think that if you want to learn about the oil and gas business it helps to have "some skin in the game".......in other words, invest in the stock of some of these companies.  You WILL follow their ups and downs, and you will read the news, and pay more attention to political issues. 

Then if you're smart and get lucky, you might make some money.  For example, Brigham turned a nice profit when it was bought out by Statoil, and likewise when Petrohawk was acquired by BHP Billiton (?).

This is all a learning experience, for almost everyone.  I appreciate Mr. Filloon's analysis and commentary.
Peter

To read all of the following article, go here: http://seekingalpha.com/article/632641-bakken-update-continental-resources-well-results-are-getting-better?goback=%2Egde_156898_member_121215590

Bakken Update: Continental Resources' Well Results Are Getting Better

June 2, 2012 | 28 commentsby: Michael Filloon | includes: KOG, OAS, STO, WLL

About the author: Michael Filloon

 

 

Michael Filloon

 

I have done a series of articles covering recent well results by Bakken operators. Information garnered from this shows improvements in 90-day IP rates. The main reasons are stimulation improvements from increase stages and proppant, but these companies are doing a better job in all phases of production. It wasn't long ago we were seeing 10 stage short laterals, and now long laterals with 30+ stages are common place. In my opinion, the two best operators are Kodiak (KOG) and Brigham (STO). It should be noted both have very good acreage positions as well. Kodiak's Polar and Koala prospects are its best, while Brigham's Alger Field acreage is thought by some to be the best in the Bakken. Whiting (WLL) has had some very good completions in Sanish Field, and has been the first to work the Pronghorn. Oasis (OAS) is getting much better, with significant upside in the Camp Field area.
Continental (CLR) may be the best way to follow the Bakken. It has a large acreage that covers a significant area in North Dakota and Montana. Because of this, it has well results in virtually every area of the Williston Basin. Here are its 4Q 2011 and 1Q 2012 well results.

More Horizontal Drilling In South Texas

Some (for example Petrohawk) think the Cretaceous Eagle Ford Shale may be Texas' next big shale gas play. In typical fashion, a vertical well is first drilled, cored, logged and tested. The vertical well is used for control, or as a standard by which to evaluate horizontal wells drilled nearby. The vertical well can be re-entered, or offset and then a new well bore is "kicked-off" and drilled laterally, or horizontally into the most prospective-looking layers of shale, often as far as 4-5,000 feet.

"Horizontal" is actually an over-simplification. What the operators try to do is drill parallel to bedding so the well bore stays in the preferred stratigraphic interval. That may not always be as simple as it sounds. The trick is steering the drill bit while the well is drilling. And this is where the services the Dallas-based consulting company Horizontal Solutions International come in.

Once the well has been drilled, the well is cased and cemented. The data is evaluated and a frac treatment (hydraulic fracturing) is planned. The horizontal section is then perforated and selectively "fraced", usually in stages. Then the well is opened up tested and often produced at exceptionally high rates of gas flow. Imagine having 4,000 feet of perforations in your pay zone! "Old-time" geologists and engineers can only dream with envy at modern technology.

If you would like more information on steering a horizontal well, contact me at geo-pete@live.com.


Texas-South

By OGJ editors
HOUSTON, May 5 -- St. Mary Land & Exploration Co., Denver, is drilling the horizontal section of its first operated well targeting Cretaceous Eagle Ford shale.

The company cored the Eagle Ford in a vertical hole in the Maverick County well before plugging back and kicking off the lateral. It will run a microseismic study as it fracs the well.

The company plans to drill three more horizontal Eagle Ford wells later in 2009 and will continue participating with TXCO Resources Inc. and Anadarko Petroleum Corp. in the joint venture that targets the Pearsall and Eagle Ford shales.

The Eagle Ford Shale: A Major New Gas Play?

If true, these results indicate a major new shale gas play. Not much is said, but the implication is it involves horizontal drilling and hydraulic fracturing. Of course there is always the need for accurate steering of the drill bit to make sure the well stays in the preferred "zone", or the stratigraphic interval with the highest productivity.
Peter

Petrohawk calls Eagle Ford a top shale play
By OGJ editors HOUSTON, Apr. 21 --
Formation characteristics from two of its first five wells indicate that the Cretaceous Eagle Ford shale in LaSalle and McMullen counties of South Texas "is one of the highest quality shale reservoirs discovered in the US," said Petrohawk Energy Corp., Houston.

Petrohawk raised its internally estimated ultimate recovery assumption for wells in the play to a midpoint of 5.5 bcfe/well, with a range of 4-7 bcfe/well, based on gas in place data derived from the core analysis from the two wells and performance of wells completed to date.
Petrohawk cited encouraging parameters from the two wells 30 miles apart: the Dora Martin-1H in LaSalle County and the Donnell-1H in McMullen County.
Core analysis from the two wells indicates 180-210 bcf/sq mile of free gas in place, 83-85% gas saturation, 9.4-10.7% porosity, 1,110-1,280 nanodarcies of permeability, and 4.4-4.7% total organic carbon.

Petrohawk recognizes a trend across the field from southwest to northeast of increasing condensate yield, from no condensate production from the Dora Martin-1H to a yield of 110 bbl/MMcf of gas from the Donnell-1H.

The Eagle Ford shale has been encountered in all five wells from 11,000 ft to 11,700 ft true vertical depth. Petrohawk has leased 160,000 contiguous net acres prospective for the formation in LaSalle and McMullen counties. The Texas Railroad Commission has named the area Hawkville field.

Petrohawk operated one horizontal rig in the play in the quarter ended Mar. 31 and has added a second rig.

Three wells were drilled and two were completed in the quarter. The Donnell-1H was completed on Feb. 20 at 3.6 MMcfd and 395 b/d of condensate on a 19/64-in. choke with 3,585 psi flowing casing pressure. The Brown Trust-1H was completed on Mar. 26 at a rate of 8.1 MMcfd and 200 b/d of condensate on a 24/64 in. choke with 4,210 psi flowing casing pressure.
"Production data from the four wells completed to date indicates lower initial annual decline rates, and a flatter hyperbolic decline, than those observed in other shale plays," Petrohawk said.

The company's first three wells, which had pilot holes, averaged 53 days from spud to rig release. The fourth had intermediate casing but no pilot hole and took 32 days. The fifth well was drilled in 22 days without intermediate pipe or a pilot hole.
Drilling and completion costs range from $4.5 million to $5.5 million/well.

Petrohawk: A Very Successful Producer In Shale Gas Plays

Consider the following facts and figures. The numbers of wells drilled, their success rate, and production rates all demonstrate a very skilled operation. The follwing comes from Petrohawk's own website here.
Peter

Petrohawk Provides Fourth Quarter Operational Update (2008)

Final Proved Reserves up 34% Year Over Year at 1.42 Tcfe, 419% of Production Replaced Haynesville Shale Gross Operated Production Reaches 160 Mmcfe/d

HOUSTON, Feb. 3 /PRNewswire-FirstCall/ -- Petrohawk Energy Corporation ("Petrohawk" or the "Company") (NYSE: HK) provided its fourth quarter 2008 operational update, including additional drilling results in the Haynesville Shale and proved reserves for year-end 2008.
During the fourth quarter, Petrohawk drilled 218 wells, with a success rate of 98%. On average, 32 operated rigs and 15 non-operated rigs were running during the quarter, including a combination of spudder rigs and horizontal rigs in both the Haynesville Shale and Fayetteville Shale development programs. For 2008, Petrohawk drilled 739 total wells, also with a success rate of 98%.

Production for the fourth quarter was approximately 361 million cubic feet of natural gas equivalent (Mmcfe/d), a 15% quarter over quarter increase and a 52% increase over fourth quarter 2007, on a pro forma basis. Petrohawk exited the quarter producing approximately 400 Mmcfe/d. Full year 2008 production was approximately 305 Mmcfe/d.
strong>Haynesville Shale
Petrohawk recently placed four additional wells online utilizing production practices consistent with previously reported wells. The initial production rates of these wells averaged 17.7 Mmcfe/d, detailed as follows:

The Mack Hogan #4 (Bossier Parish, Section 3, 16N, 11W) had an initial production rate of 13.4 Mmcfe/d on a 24/64" choke with 6,350# flowing casing pressure.

The Osborne 8 #3H (Bossier Parish, Section 8, 16N, 11W) had an initial production rate of 18.8 Mmcfe/d on a 24/64" choke with 6,800# flowing casing pressure.

The Roos "A" #5 (Bossier Parish, Section 3, 16N, 11W) had an initial production rate of 15.1 Mmcfe/d on a 24/64" choke with 6,100# flowing casing pressure.

The Griffith 11 #1 (DeSoto Parish, Section 11, 13N, 14W) had an initial production rate of 23.3 Mmcfe/d on a 28/64" choke with 7,550# flowing casing pressure. This well is a significant step-out to the southwest from existing completions.

Two Haynesville Shale completions, the Sample 4 #1 and the R.E. Smith Jr. 32 #1, experienced mechanical problems that resulted in lower than expected initial production rates. On the Sample 4 #1, a valve malfunctioned following completion, causing casing damage in the lateral portion of the well. The Company elected to produce the well on a 12/64" choke as a precaution against further wellbore damage. This well had an initial production rate of 5.4 Mmcfe/d with 7,020# flowing casing pressure. The R.E. Smith Jr. 32 #1 screened out halfway through completion due to the inadvertent firing of a perforating gun in the curve of the lateral. With only six stages of fracture stimulation, this well had an initial production rate of 11.1 Mmcfe/d on a 20/64" choke with 5,900# flowing casing pressure.

The Company is currently producing approximately 160 Mmcfe/d gross from the Haynesville Shale with 16 operated wells on production. Eleven operated wells have been on production 30 days or more, averaging 15.2 Mmcfe/d over their first 30 days of production. Eight operated wells have been on production 60 days or more, averaging 13.2 Mmcfe/d over their first 60 days of production. The four wells on production greater than 90 days have averaged 8.8 Mmcfe/d over their first 90 days of production. All operated wells to date have been produced utilizing similar production practices. During 2009, Petrohawk will conduct a pilot program on certain wells whereby production practices will be altered to restrict production by utilizing smaller choke sizes. The Company will monitor this subset of wells for effects on decline rate and mechanical operation.

Petrohawk's current drilling and completion methodology focuses on completing wells with longer laterals and maximizing the number of frac stages, spaced approximately 325 feet apart. The objective of this technique is to minimize the total number of wells required to effectively drain the reservoir, resulting in lower overall development costs. The Company is currently targeting lateral lengths between 4,300' and 4,600' with up to 15 frac stages. Petrohawk's first four completions averaged 3,339' in lateral length with 10 frac stages while the last twelve completions have averaged 3,958' in lateral length and 12 stages (with the exception of the R.E. Smith Jr 32 #3, which had down hole mechanical issues and only six frac stages).

During 2008, the Company utilized a "pre-drill" program whereby smaller, "spudder" rigs drilled the vertical portion of the wellbore in advance of horizontal rigs moving in to drill the lateral. At year end 2008, Petrohawk had eleven operated horizontal rigs running in the Haynesville Shale. The Company expects spud-to-first sales to average approximately 75 days during 2009, assuming longer laterals are drilled.

Petrohawk has budgeted $690 million for Haynesville Shale drilling in 2009. Seventy-five to eighty gross operated wells are budgeted, with approximately 6 wells expected to be completed per month. The Company expects to operate an average of 12 rigs in the play in 2009 with an emphasis on holding operated acreage.

Eagle Ford Shale
A second well in Petrohawk's Eagle Ford Shale discovery in South Texas, formally known as Hawkville Field, was completed in mid-January. The Dora Martin #1H, located approximately 14 miles west of the Company's first Eagle Ford Shale well, tested at a rate of 8.3 Mmcfe/d on a 22/64" choke with 4,610# flowing casing pressure. The well was drilled to a true vertical depth of approximately 11,000' and had a lateral length of 4,300' with 12 stages of fracture stimulation. The Company has also reached total depth on its third well, the Donnell #1H. Completion is scheduled for mid-February. Petrohawk is currently running one rig in the play with drilling and completion expected to average 50 days.

Fayetteville Shale
During the fourth quarter, Petrohawk drilled 44 operated and 74 non-operated wells in the Fayetteville Shale. Of 143 horizontal wells drilled during 2008, 113 had state test data available at December 31, 12 were waiting on state tests to be performed, and 18 were waiting on completion due to the delayed in-operation date of the Boardwalk pipeline. Current gross operated production in the Fayetteville Shale reached approximately 145 Mmcfe/d as of December 31, 2008.

Throughout 2008, the Company experienced significant operational improvements in the results of its completions, primarily as a result of drilling longer laterals with cemented liners. This supported by the following data comparing first quarter 2008 and fourth quarter 2008 techniques and results as follows:
Percentage of cemented liners increased from 4% in the first quarter to 100% in the fourth quarter.
Average lateral length increased from 2,286' in the first quarter to 2,655' in the fourth quarter, a 16% increase.
Average number of frac stages increased from 6.0 in the first quarter to 7.6 in the fourth quarter, a 27% increase.
Average state initial production test rate increased from 1.919 Mmcfe/d in the first quarter to 2.456 in Mmcfe/d in the fourth quarter, a 28% increase.
Percentage of completions that tested greater than 3 Mmcfe/d increased from 12% in the first quarter to 54% in the fourth quarter, with 2 wells in the second half of 2008 testing greater than 5 Mmcfe/d.

Price realizations and overall production from the Fayetteville Shale were impacted in the fourth quarter by a delay in the completion of a new third-party pipeline, which increased demand on other transportation lines servicing the play, causing wider than normal basis differentials. Production was either sold at lower than normal prices or shut in at various times during the quarter as a result of these market conditions. The new pipeline, constructed by Boardwalk Pipeline Partners LP, is currently in service and the Company currently expects no additional transportation constraints on its production in the area.

New Gathering Subsidiary - Hawk Field Services, LLC
During 2008, Petrohawk initiated construction of its own gathering systems servicing the Company's as well as third party production in the Fayetteville Shale and Haynesville Shale. Operating under a new subsidiary, Hawk Field Services, LLC, Petrohawk constructed approximately 100 miles of gathering lines in the Fayetteville Shale in 2008, with approximately 150 miles of gathering lines currently in service, under construction or planned in the Haynesville Shale during 2009.

Petrohawk Fourth Quarter and Full Year 2008 Earnings Conference Call
Petrohawk has scheduled a conference call for Wednesday, February 25, 2009 at 9:30 a.m. CDT (10:30 a.m. EDT) to discuss fourth quarter and full year 2008 financial and operating results. To access, dial 800-644-8607 five to ten minutes before the call begins. Please reference Petrohawk Energy Conference ID 81822729. International callers may also participate by dialing 706-679-8184. A replay of the call will be available approximately two hours after the live broadcast ends and will be accessible until March 11, 2009. To access the replay, please dial 800-642-1687 and reference conference ID 81822729. International callers may listen to a playback by dialing 706-645-9291. In addition, the call will be webcast live on Petrohawk's website at http://www.petrohawk.com/. A replay of the call will be available at that site through March 11, 2008.

Petrohawk Energy Corporation is an independent energy company engaged in the acquisition, production, exploration and development of natural gas and oil with properties concentrated in North Louisiana, Arkansas, East Texas, Oklahoma and the Permian basin.

For more information contact Joan Dunlap, Vice President - Investor Relations, at 832-204-2737 or jdunlap@petrohawk.com. For additional information about Petrohawk, please visit our website at http://www.petrohawk.com/.

Some Incredible Gas Wells In The Haynesville Shale

Undoubtedly these are horizontal wells by Petrohawk. It is easy to understand the excitement over the potential of the Haynesville Shale Gas Play.
Peter

Petrohawk Announces Three New Haynesville Shale Wells Placed on Production at a Combined Rate of 73 Mmcfe/d

HOUSTON, Dec. 9 /PRNewswire-FirstCall/ -- Petrohawk Energy Corporation ("Petrohawk" or the "Company") (NYSE: HK) has placed three additional Haynesville Shale wells on production at a combined rate of 73 Mmcfe/d, one with the highest reported initial production rate of any well in Petrohawk's history, as follows:

--The Brown 17 #4 (69% W.I.), located in Section 17-T16N-R11W, Bossier Parish, Louisiana, was completed on November 18 and produced at a rate of 23.4 Mmcfe/d on a 26/64" choke with 7,700# flowing casing pressure.

--The Goodwin 9 #5 (97% W.I.), located in Section 9-T16N-R11W, Bossier Parish, Louisiana, was completed on November 25 and produced at a rate of 21.1 Mmcfe/d on a 26/64" choke with 6,750# flowing casing pressure.

--The Sample 9 #1 (100% W.I.) is located in Section 9-T14N-R11W, Red River Parish, Louisiana, approximately 12 miles south of Elm Grove Field. It was completed on November 27 and produced at a rate of 28.2 Mmcfe/d on a 30/64" choke with 7,100# flowing casing pressure.

The Company expects to complete five additional Haynesville Shale wells by the end of the year.
Petrohawk Energy Corporation is an independent energy company engaged in the acquisition, production, exploration and development of natural gas and oil with properties concentrated in Northwest Louisiana and East Texas (Haynesville / Bossier Shale and Cotton Valley), Arkansas (Fayetteville Shale), South Texas (Eagle Ford Shale), Oklahoma and the Permian basin.

For more information contact Joan Dunlap, Vice President - Investor Relations, at 832-204-2737 or jdunlap@petrohawk.com. For additional information about Petrohawk, please visit our website at http://www.petrohawk.com/.