Fayetteville Shale | Southwestern Energy

Southwestern Energy Company discovered the economic viability of the Fayetteville Shale and was the first company to drill and successfully produce its natural gas. At June 30, 2010, Southwestern held approximately 889,000 net acres in the play area (including approximately 125,000 net acres in the traditional Fairway portion of the Arkoma Basin). At July 30, 2010, the company’s gross production rate from the Fayetteville Shale play was 1,447 MMcf per day, up from approximately 990 MMcf per day a year ago. The company is currently utilizing 24 drilling rigs in its Fayetteville Shale play, including 16 that are capable of drilling horizontal wells and 8 smaller rigs that are used to drill the vertical portion of the wells.
During the second quarter of 2010, Southwestern placed a total of 143 operated wells on production in the Fayetteville Shale play, all of which were horizontal wells fracture stimulated using slickwater. The company’s wells placed on production during the second quarter averaged initial production rates of 3,449 Mcf per day, up 8% from average initial production rates of 3,197 Mcf per day in the first quarter of 2010. Results for the second quarter of 2010 include 75 wells placed on production which were the first well in a new section. The company also placed 9 wells on production at initial production rates over 6.0 MMcf per day.
During the second quarter of 2010, the company’s horizontal wells had an average completed well cost of $3.1 million per well, average horizontal lateral length of 4,532 feet and average time to drill to total depth of 13 days from re-entry to re-entry. This compares to an average completed well cost of $2.8 million per well, average horizontal lateral length of 4,348 feet and average time to drill to total depth of 12 days from re-entry to re-entry in the first quarter of 2010. In the second quarter, the company had 22 wells with drill times of over 20 days, most of which were first wells in sections that were in the deeper southern areas of the play. During the second quarter of 2010, the company also placed 3 wells on production which had average times to drill to total depth of 5 days or less from re-entry to re-entry. In July of 2010, the company’s average time to drill to total depth improved to 10 days from re-entry to re-entry, and the company also set a new record by drilling a well with total footage of approximately 6,600 feet in 4 days. The company’s horizontal rig count will drop to 15 rigs in mid-August as a result of the lower drilling days.
Operating income for the company’s midstream services segment was $43.8 million for the second quarter of 2010, up from $27.8 million for the second quarter of 2009. Gathering volumes, revenues and expenses for this segment are expected to continue to grow as reserves related to the company’s Fayetteville Shale play are developed and production increases. At August 2, 2010, the company’s midstream segment was gathering approximately 1,620 MMcf per day through 1,367 miles of gathering lines in the Fayetteville Shale play area, up from approximately 1,060 MMcf per day through 960 miles of gathering lines a year ago.
In 2010, Southwestern’s program in the Fayetteville will continue to focus on optimizing well spacing and completion technique. The company plans to invest approximately $1.5 billion in its Fayetteville Shale play, which includes participating in approximately 650 to 680 gross wells, 475 to 500 of which are planned to be company-operated.

Last Updated on 08/11/2010