Throughout the quarter, Petrohawk Energy drilled 165 gross wells, of which 34 were operated, with a success rate of 99%.
Haynesville shale:
Petrohawk Energy made the use of eight horizontal rigs on average in the Haynesville shale during the first quarter of 2009, excluding spudder rigs. A total of 15 operated and 16 non-operated wells were drilled. Of the operated wells, 11 were on production at the end of the quarter. In addition to this five operated wells that were drilled in late 2008 were put on production, bringing the total number of Haynesville shale wells done by the end of first quarter to 28. The average early production rate for operated wells concluded during the quarter ranged from 3.3 Mmcfe/d to 24.8 Mmcfe/d, averaging 17.1 Mmcfe/d. The average initial production rate for all operated Haynesville shale completions to date, excluding two formerly reported wells that were mechanically compromised, is about 18 Mmcfe/d.
Spud to spud times are at present averaging 60 days, with total spud to first production times averaging 80 days. Drilling efficiencies are being gained by increasing the size of the intermediate casing used, from 7 to 7 5/8 inch. This has allowed for a larger hole size while drilling the lateral, which in turn has resulted in considerably higher rates of penetration. Petrohawk Energy has also undertaken more progressive angle-building in the curve, and thicker geosteering targets, which have also contributed to reduced drilling days. Drilling and completion costs are at present ranging between $9 million and $10.5 million per well, based on average lateral lengths of 4,300 feet with 12 to 14 fracture stimulation stages per well. Petrohawk Energy is targeting development well costs between $8.5 and $9.5 million per well.
The company continues to employ the same basic completion procedures utilized in 2008, with some refinements. Lateral lengths are targeted at between 4,300 and 4,600 feet, with frac stages spaced about 325 feet apart. Each stage is consists of four perforation clusters, two feet in length, and spaced about 80 to 85 feet apart. Petrohawk Energy makes use of a slickwater technique as well as either ceramic or resin-coated proppant, preceded by 100 mesh sand. The longest lateral length drilled so far has been about 4,700 feet with 14 stages of fracture stimulation. Even though these procedures have delivered outstanding well performance, Petrohawk Energy continues to assess these procedures and plans to test differences on these methods to maximize well economics.
Recently drilled wells have tested several new development areas away from Elm Grove Field. Petrohawk Energy will conduct its 2009 program on locations in excess of 40 miles apart in both north-south and east-west directions which includes portions of Caddo, Bossier, Red River and DeSoto parishes. East Texas development will mainly be directed through a joint venture partnership with EOG Resources, which anticipates increasing the drilling activity in the joint venture area during 2009.
Additionally to its accessible infrastructure from operations in Elm Grove field of northwest Louisiana, Petrohawk Energy has concluded building on more than 50 miles of 16 inch gathering lines as well as about 330 Mmcf/d of treating capacity to service new production from the Haynesville shale. Petrohawk Energy anticipates building a further 112 miles of gathering pipeline and an additional 420 Mmcf/d of Company-owned treating capacity by the end of 2009.
In addition to this Petrohawk Energy has finalized an agreement with Regency Energy Partners to secure space on Regency’s Haynesville expansion project to transport 400 Mmcf/d from the area. The Haynesville expansion project is anticipated to be concluded by year-end 2009. Not including the incremental transportation space added by the Regency Energy Partners project, Petrohawk Energy’s total takeaway capacity constructs to 850 Mmcfe/d during 2009, with further takeaway capacity available on a non-contracted basis. Additionally, the company has acquired firm transportation on other pipelines that it expects will provide sufficient take-away capacity for future Haynesville shale production.
Eagle Ford shale
In South Texas, Petrohawk Energy has leased about 160,000 contiguous net acres prospective for the Eagle Ford shale in LaSalle and McMullen counties. This area has been documented by the Texas railroad commission as Hawkville field. During the first quarter, Petrohawk Energy operated one horizontal rig in the play and recently added a second rig. Three wells were drilled and two were concluded during the quarter.
The Donnell #1H was concluded on February 20, 2009 at a rate of 3.6 Mmcf/d and 395 barrels of condensate per day (Bc/d), or 6.1 Mmcfe/d, on a 19/64 choke with 3585# flowing casing pressure. The Brown trust #1H was concluded on March 26, 2009 at a rate of 8.1 Mmcf/d and 200 Bc/d (9.3 Mmcfe/d) on a 24/64 choke with 4210# flowing casing pressure. Production data from the four wells concluded so far points out lower initial annual decline rates, and a flatter hyperbolic decline, than those observed in other shale plays.
Petrohawk Energy is encouraged by study of core samples from two of the wells drilled so far. The company identifies a trend across the field from southwest to northeast of rising condensate yield, from no condensate production from the Dora Martin #1H to a yield of about 110 barrels per million cubic feet of gas from the Donnell #1H, with a distance of about 30 miles between the two wells. The Eagle Ford shale has been encountered in all five wells from between about 11,000′ and 11,700′ true vertical depth.
Other encouraging aspects of the core analysis of these two wells include the following: average total organic content (TOC) between 4.4% and 4.7%; total porosity ranges between 9.4% and 10.7% average permeability ranges between 1,110 and 1,280 nanodarcies; gas saturation ranges between 83% and 85%; and anticipated free gas in place per section between 180 and 210 Bcf. These measurements, as they relate to other shale plays, suggest that the Eagle Ford shale in this particular area is one of the highest quality shale reservoirs discovered so far in US.
Based on gas in place data derived from the core analysis, along with the performance of wells concluded so far, Petrohawk Energy is raising its internally anticipated ultimate recovery assumption for wells in this play to a midpoint of 5.5 Bcfe per well, with a range of 4-7Bcfe/well.
Drilling efficiencies previously achieved in the play highlight the economic potential of the Eagle Ford shale, relative even to other efficient properties in Petrohawk Energy’s portfolio, such as the Haynesville shale. Drilling and completion costs have been decreased by about 60% from the first well drilled to the most recent well completed. The first three wells drilled in the play, which were all drilled with pilot holes, whole cores and intermediate casing set, averaged 53 days from spud to rig release.
The fourth well, which did not have a pilot hole drilled but did set intermediate casing, was drilled to total depth in 32 days. The fifth well, which also did not require a pilot hole but did not have intermediate casing set, was drilled to total depth in 22 days. An improvement in well design has abolished the need for intermediate casing going forward. Average drilling and completion costs for Eagle Ford shale wells in Hawkville field are at present ranging from $4.5 million to $5.5 million.
