Southwestern Energy shares fall

Shares of oil and natural gas producer Southwestern Energy Inc., which have rallied this year, fell Friday along with oil prices and the company revealed a new venture in unproven territory.

THE SPARK: The company reported late Thursday that net income in the second quarter rose to $167.5 million, or 48 cents per share, from $122.1 million, or 35 cents per share, a year earlier. That beat analysts' expectation of 45 cents per share, according to FactSet.

But average initial production dropped 7 percent from a year ago at new gas wells in the Fayetteville shale formation. The rates were the lowest for new wells since the second quarter of 2009. The company blamed shorter lateral lengths, the increasing number of wells, and new locations.

ANALYSIS: Michael Bodino of Global Hunter Securities LLC said several factors were pushing the stock lower Friday, including concern about the lower initial production rates in the Fayetteville shale wells and a forecast of "limited" production growth in the third quarter compared with the second quarter.

Source: Bloomberg

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Fayetteville Shale Boosts Southewestern

The company recorded a net profit of $167.5 million in the June 2011 quarter, up from the $122 million recorded in June 2010, as total natural gas and crude oil production rose to 122.8 billion cubic feet equivalent, up 25% on the June 2010 result.

Total revenue rose about 30% to $765.2 million.

Gross production from the Fayetteville shale rose to 1.8 billion cubic feet of gas per day, 400 million cubic feet per day higher than during the same quarter during the previous year, the company said.

Southwestern had placed 149 operated wells in the Fayetteville shale on production during the quarter, all horizontal wells fracture stimulated using slickwater.

The higher volumes offset a slightly higher operating cost ofr the company, with overall production growing 25%.

Company chief executive Steve Mueller said the company had had a great second quarter, with production from the Fayetteville shale its primary driver.

“However, we are also beginning to see the impact of our Marcellus Shale activities on our production, as we placed several strong wells on-line during the quarter,” he said.

The company also planned to drill its first well in Arkansas’ Columbia County in August and would spud in the third quarter, in the Lower Smackover Brown Dense formation, planning to drill to about 8900 feet with a horizontal lateral length of 3500 feet.

A second well, which was planned to spud later this year, was in Louisiana’s Claiborne Parish, going to a depth of 10,700 feet and horizontal lateral of 6000 feet.

“We plan to drill up to 10 additional wells as we continue to test the concept in 2012,” Mueller said.

“If our testing yields positive results, we expect that our activity in the play could increase significantly over the next several years."

Source: Upstream Online 

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Chesapeake Annouces Sale of Fayetteville Shale Assets to BHP Billiton

Chesapeake Energy Corporation has agreed to sell all of the company's interests in approximately 487,000 net acres of leasehold and producing natural gas properties in the Fayetteville Shale play in central Arkansas to BHP Billiton Petroleum, a wholly owned subsidiary of BHP Billiton Limited, for $4.75 billion in cash before certain deductions and standard closing adjustments. The transaction includes existing net production of approximately 415 million cubic feet of natural gas equivalent per day and midstream assets with approximately 420 miles of pipeline. As part of the transaction, Chesapeake has agreed to provide essential services for up to one year for BHP Billiton's Fayetteville properties for an agreed-upon fee. The transaction is expected to close in the first half of 2011. 

Aubrey K. McClendon, Chesapeake's Chief Executive Officer, commented:"We are pleased to announce the sale of our Fayetteville Shale assets to BHP Billiton and quickly achieve substantial progress in implementing the debt reduction targets of our previously announced 25/25 Plan. BHP Billiton is a premier global company and we look forward to working with BHP Billiton's management to ensure a smooth transition of operations." 

"The Fayetteville shale is a world-class onshore natural gas resource," said J. Michael Yeager, Chief Executive of BHP Billiton Petroleum. "The purchase of this long-life field immediately adds over 10 trillion cubic feet of gas resources to our portfolio and is consistent with our strategy of investing in large, low cost assets with significant volume growth for future development." 


Source: Oil Voice 


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New Weigh-In Pads in Fayetteville Shale Area

The Arkansas Highway Department is moving forward with plans to build eight new commercial truck weigh-in pads in central Arkansas.

The pads will be in the Fayetteville shale area of the state due to increase in traffic from natural gas drilling.

Trucks from natural gas rigs have caused significant damage to roads in recent years.

Randy Ort of the highway department says these pads will not be very big.

"These are simply going to be, for a lack of a better term, wide spots in the road." Ort said, "An area where a truck can pull off safely."

Highway officers will inspect the trucks with the portable scales they carry with them.

Ort says the project is expected to cost about one point six million dollars, but the plan is still in its early stages and no contractor has been chosen.

Ort says that the narrow, hilly roads of the area aren’t equipped to handle the amount of inspections needed.

These pads will eliminate the need for multiple patrols to make one inspection. 

The highway department’s officers issued over three thousand over weight citations in the federal fiscal year ending in September 2010. 

Source: KUAR

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