Posted by
theoilpatchplug on Wednesday, June 11, 2008 10:50:32 AM
Test wells were drilled through the Barnett Shale Formation for years and only dry holes and some information was developed. Mitchell Energy geologist and engineers finally figured out that they could frac or prop open the limited permeability (ability for oil to flow) with sand and natural gas began to flow in Wise County.
Sandy Dvorin a wildcatter from Dallas figured out that the same Barnett Shale could produce in the Dallas /Ft. Worth suburbs and the Barnett Shale rush was on. Sandy told me he could only get $3 or less for his natural gas and the wells were barely economic at that price. 7170 Barnett Shale wells have been drilled and completion techniques have improved. The prices have improved to over $11 per million cubic feet.
Today 3.1 Billion Cubic feet of natural gas flows from horizontal wells and a few vertical wells with fracs. The reserves are conservatively estimated to be in excess of 26 Trillion Cubic Feet of natural gas. Operators are paying up to $26,000 per acre for a 3 year lease with 25% royalties. This was just the beginning.
There are major shale plays in Wyoming, Arkansas, Mississippi and a brand new play in Northern Louisiana and East Texas know as the Haynesville Shale. The Haynesville Shale was over 168 Trillion Cubic Feet of Natural Gas in reserves. Leases in some of the hot spots are going for $35,000 per acre with 25-36% royalties.
Down to the south the Pearsall Shale is heating up. We have leases with shallow oil zones between the Barnett and the Pearsall plays. I believe these plays will fill in and we are just in the beginning phases of many major discoveries.
Oil and Gas Real Estate plays might be a good way for the small guy to participate in increasing our energy reserves. If you own the lease and can hold the leases with shallow production you can farm out portions of the leases and reserve royalties as well as receive a large lease bonus. These deep wells can cost up to $7-10 million to drill and complete and investors could retain 5-10% in overriding royalties which could earn millions per year per well.
Help is on the way. Now, if we could get congress to get out of the way of the big boys.