Happy New Year, all.  Hope it brings health and wealth to everyone.

Is anyone aware of any increased interest in or increased activity in the Austin Chalk or Buda, in the general area where Wilson, Atascosa and Karnes meet?  Or even Pearsall?! (Remembering the infamous Lang 11-H).

I have seen several operators and wells northeast of this area, up the Wilson-Karnes line, 20+ miles away NE.

Thanks.

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On a side note, I've been tracking EOG's Austin Chalk production in the Sugarkane (Austin Chalk) Field in Karnes County since the first well was brought into production in January 2016.  As of November 30, 2018, EOG has 75 wells producing, and total field production has reached 17.7 million BO and 48.6 BCF over the 34 months since the first well was completed.

Some of these wells have been monsters.  As an example, the Kilimanjaro 101H produced more than 900,000 BO and 1.8 BCF in its first 16 months of production.

EOG has filed Completion Reports with the Texas RRC on 70 wells so far, and here are the average 24-hour test results:

BO:  3,062

MCF:  4,319

This isn't a big area, but, man, is it a sweet spot!

The Gods of O&G (in concert with Mother Nature) have created these ultra sweet spots in various O&G trend areas where everything lines up for optimum results. I mapped out this area in Karnes County and it only covers about 50 square miles to total area.

It is definitely geologically control but interesting and puzzling as to the key dynamics - and VERY difficult for non O&G professionals to understand.

The metrics for this sweet spot (e.g. royalty revenue per net acre) is mind boggling. Some nice new pick ups being purchased in Kennedy, Karnes City and Cuero!.

Alan, what I would give for a 900,000 barrel well over 25 years, much less 16 months!

Wouldn't we all!

EOG just announced 5-6 more AC completions in this area - ranging from 2000 to 5500 BOPD IP rates

COP is currently drilling an Austin Chalk well just north east of Karnes City. Be interesting to see how this well performs.

843471  255-36106  BURLINGTON RESOURCES O & G CO LP (109333)  ESCONDIDO A B USW D 701   02  KARNES  Horizontal  New Drill  17500 

The interesting thing about this well is that it is part of a three well pad with two Eagle Ford horizontals being drilled about 700' apart in the same approximate target zone with this AC well being drilled in between (about 350' from each EF lateral) in a target zone that is 200-250' above the EF target zones.

Wonder if they will zipper frac all three to create a stimulated rock volume covering the entire interval instead of frac'ing each well individually and being concerned about frac hits and communication / negative impact on stimulations?

Mark, do you know if COP is doing these close proximity wells any other place in the Eagle Ford? Or anyone else for that matter? We have mineral interest in close proximity to the Escondido wells but up to this point COP has only drilled enough to hold the leases. With that said it appears that COP has been in contact with us appears they will be drilling quite a few more in the near future.

We are also seeing a large increase in entities trying to buy out our mineral interest in the area. We have been receiving offers for our minerals for quite some time but the offers have really increased in number and the amount that they are willing to pay has increased by quite a bit as well.

I am not doing any continual studies of the area to know who is doing spacing tests like this, but I am comfortable in saying that EVERY operator is evaluating this issue (i.e. how close can they put their laterals in a three dimensional situation to optimize oil recovery without negatively impacting well production - and economics).

With acreage being HBP, it is not a situation of when to drill and how to drill and how many to drill to get the most O&G out of the reservoir.

The shallower AC play creates a potential problem due to EF fracs growing upward and creating situations where the AC cannot be effectively frac'd. Similar issues in the Permian Basin horizontal plays.

I have some royalty interest with Pioneer wells near Kenedy. Like you, I have been seeing an increase in unsolicited offer to purchase my minerals. And some at much higher prices than before.

I'm never selling - especially with Pioneer looking to eventually sell their EF assets in this area.

Agreed, we don't have any intention of selling either. As always thanks for your opinion and input. Regards neighbor. 

Mark,

EOG has drilled one AC well, Novosad 101 just West of Shiner, is this an area that could be prime for AC development?

Great question!

Bottom line first - I would not use the term "prime" with respect to the AC Hz frac play for this part of Gonzales County.

When EOG started making this play, they drilled wells across a broad area to test the concept and quantify / prioritize potential drilling areas from best to worst. They had a lot of AC info across this area based on their drilling and development of the deeper Eagle Ford section.

They drilled a few wells in Gonzales Co but then put their focus on other areas (e.g. Karnes County).

The Novosad 101H is an "OK" well. IP in the 750+ BOPDS range and early production around 600 BOPD. Attached is the production data (via DrillingInfo) to date. I figure that this well will eventually make around 350-400 MBO with 250-350 MMCF over its lifetime.

These results are at best marginal as to discounted economics in today's O&G market. There is zero urgency for EOG to try to drill more AC wells and try to get better results since this section is HBP by the deeper Eagle Ford production and will be for the foreseeable future.

Based on the well performance, I am thinking that there is a lesser reservoir quality (as to P&P) in the AC in this area. Plus there is a much lower gas content (and therefore the related reservoir energy) to help get the oil out of the rock and into the wellbore.

Some operators who have AC only rights may drill more AC wells in part of the trend - but assuming some consistency in the AC reservoir, the results will be marginal as to economic returns.

Just my opinion as always.

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