Timothy Smith
12 years ago
Summary Financial Results
The Company reported net income of $3.9 million, or $0.09 per basic share, for the second quarter of 2012 compared to a net loss of $2.8 million, or ($0.06) per basic share, for the second quarter of 2011. In the second quarter of 2012, a special cash item impacting net income was a $4.0 million refund for a portion of 2007-2011 severance taxes received from the State of Texas for certain marketing cost deductions. Special non-cash items impacting the second quarter of 2012 were an unrealized pre-tax gain of $3.0 million related to the mark-to-market valuation requirement on our commodity price hedges and a $0.8 million leasehold impairment charge. In the second quarter of 2011, we recognized an unrealized pre-tax gain of $2.1 million related to the mark-to-market valuation requirement on our commodity price and interest rate hedges and a $4.0 million leasehold impairment charge. Exclusive of these special cash and non-cash items, a net loss for the second quarter of 2012 would have been $0.1 million, compared to a net loss of $1.6 million in 2011. Adjusted EBITDAX, as defined below, was $25.5 million in the second quarter of 2012, a 31% increase over Adjusted EBITDAX for the prior year quarter of $19.4 million.
Revenues for the second quarter of 2012 were $30.5 million compared to revenues of $29.7 million in the second quarter of 2011. Revenue for the quarter increased slightly as a result of the benefit of transitioning to oil and liquids-rich weighted projects, offset by the decline in natural gas production and lower realized natural gas and natural gas liquids prices.
Production for the second quarter of 2012 was 3.7 Bcfe, or 40,432 Mcfe per day, compared to production of 4.4 Bcfe, or 48,741 Mcfe per day, in the second quarter of 2011 and was at the upper range of production guidance of 38,000 – 41,000 Mcfe per day. Crude oil and natural gas liquids production averaged 46% for the second quarter, up 8% over the average in the first quarter of 2012, and up 20% from the average in the prior year quarter. In the past year, Crimson has successfully transitioned to a balanced production profile as compared to its natural gas weighted production history.
The weighted average field sales price in the second quarter of 2012 (before the effects of realized gains/losses on our commodity price hedges) was $7.60 per Mcfe compared to an average sales price of $6.45 for the second quarter of 2011. The weighted average realized sales price in the second quarter of 2012 (including the effects of realized gains/losses on our commodity price hedges) was $8.30 per Mcfe compared to a weighted average realized sales price of $6.69 per Mcfe for the second quarter of 2011. For the quarter, realized prices increased period over period, despite lower field prices for all commodities, as the realized value per equivalent unit resulting from the transition to oil and liquids, more than offset the effects of lower natural gas and natural gas liquids prices.
Direct lease operating expenses for the second quarter of 2012 were $3.6 million, or $0.98 per Mcfe, compared to $4.7 million, or $1.05 per Mcfe, in the second quarter of 2011. Lease operating expenses decreased as a result of the improved methodology of estimating expenses not yet billed by our service providers that was put in place in the third quarter of 2011.
Production and ad valorem tax expenses for the second quarter of 2012 were a credit of $2.5 million, or ($0.68) per Mcfe, compared to $2.0 million, or $0.44 per Mcfe, for the second quarter of 2011. This decrease in expense was due to a $4.0 million credit received from the State of Texas related to allowed marketing cost deductions on certain 2007-2011 severance taxes.
Depreciation, depletion and amortization (“DD&A”) expense for the second quarter of 2012 was $14.7 million, or $3.99 per Mcfe, compared to $14.4 million, or $3.24 per Mcfe, for the second quarter of 2011. DD&A expense increased slightly period over period due to the higher rate related to our transition to drilling only higher-margin crude oil wells, offset in part by lower natural gas production.
General and administrative expense in the second quarter of 2012 was $4.5 million, or $1.23 per Mcfe, compared to $4.1 million, or $0.92 per Mcfe, in the prior year quarter due to higher stock compensation expense. General and administrative expenses for the second quarter of 2012, exclusive of non-cash stock option expense recognized, was $3.9 million, or $1.06 per Mcfe, compared to $3.6 million, or $0.82 per Mcfe, for the second quarter of 2011.
Capital expenditures for the second quarter of 2012 were $27.6 million, consisting of approximately $23.0 million in Southeast Texas targeting the Woodbine formation and $4.0 million in South Texas targeting the Eagle Ford formation. Year to date, Crimson has invested approximately $60.0 million in its capital program which is approximately 80% of its currently forecasted capital program for 2012.
Timothy Smith
12 years ago
Crimson Exploration Inc. Announces Sixth Woodbine Oil Discovery at an Initial Rate of 1,332 Boepd
Jul 31, 2012 10:09:00 AM
Copyright Business Wire 2012
HOUSTON--(BUSINESS WIRE)-- Crimson Exploration Inc. (NasdaqGM: CXPO) announced today the successful completion of the Payne #1H (92.1% WI), its sixth horizontal well targeting the Woodbine formation. The Payne tested at a gross initial production rate of 1,332 Boepd, or 1,128 barrels of oil, 112 barrels of natural gas liquids and 554 mcf of natural gas, on a 40/64th choke and 328 psi of tubing pressure. The well was drilled to a total measured depth of 16,130 feet, including a 7,460 foot lateral, and was completed using 26 stages of fracture stimulation.
The Payne #1H is located in Crimson’s Force Area in Madison County, TX where the Company has approximately 5,975 net acres, or 34 additional net drilling locations based on 160 acre spacing. Including the Payne well, Crimson has successfully completed three operated wells and one non-operated well in the Force Area with an average IP rate over 1,300 Boepd, and an initial oil rate of over 1,140 bopd. The 1,140 bopd average for Crimson’s wells is significantly higher than the industry average in the area of 600 Bopd. The performance from Crimson’s wells demonstrates that this area continues to respond positively to longer laterals and perf and plug completion techniques.
Allan D. Keel, President and Chief Executive Officer, commented, “We are very pleased with the results of the Payne #1H and our continued success operating in the Woodbine formation. With four wells now drilled in the Force Area (three operated and one non-operated) averaging over 1,300 Boepd in initial rate, we are confident our 5,975 acre position in that area is substantially de-risked, thereby providing a repeatable, high margin source of oil production and reserve growth potential for Crimson. We are currently drilling in the lateral section of the Covington-Upchurch #1H well in our Iola-Grimes Area, and given success there, combined with our producing A. Yates #1H well, will have substantially de-risked the 7,650 net acres we have in that part of the Woodbine play.”
Crimson Exploration is a Houston, TX-based independent energy company engaged in the acquisition, development, exploitation and production of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, including approximately 18,500 net acres in Madison and Grimes counties in Southeast Texas, approximately 8,200 net acres in the Eagle Ford Shale in South Texas, approximately 11,000 net acres in the Denver Julesburg Basin of Colorado, and approximately 5,700 net acres in the Haynesville Shale, Mid-Bossier, and James Lime plays in San Augustine and Sabine counties in East Texas.
Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com.
This press release includes “forward-looking statements” as defined by the Securities and Exchange Commission (“SEC”) and applicable securities laws. Such statements include those concerning Crimson’s strategic plans, expectations and objectives for future operations. All statements included in this press release that address activities, events or developments that Crimson expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions Crimson made based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate under the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond Crimson’s control. Statements regarding future production, revenue, cash flow operating results, leverage, drilling rigs operating, drilling locations, funding, derivative transactions, pricing, operating costs and capital spending, tax rates, and descriptions of our development plans are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, commodity price changes, inflation or lack of availability of goods and services, environmental risks, the proximity to and capacity of transportation facilities, the timing of planned capital expenditures, uncertainties in estimating reserves and forecasting production results, operating and drilling risks, regulatory changes and the potential lack of capital resources. All forward-looking statements are based on our forecasts for our existing operations and do not include the potential impact of any future acquisitions. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. Please refer to our filings with the SEC, including our Form 10-K for the year ended December 31, 2011, and subsequent filings for a further discussion of these risks. Existing and prospective investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.
Crimson Exploration Inc.
E. Joseph Grady, 713-236-7400
Senior Vice President and Chief Financial Officer
or
Josh Wannarka, 713-236-7400
Manager of Investor Relations and FP&A
Source: Crimson Exploration Inc.
----------------------------------------------
Crimson Exploration Inc.
E. Joseph Grady
713-236-7400
Senior
Vice President and Chief Financial Officer
or
Josh
Wannarka
713-236-7400
Manager of Investor Relations and FP&A
Timothy Smith
12 years ago
Crimson Exploration Announces Second Quarter 2012 Earnings Release and Conference Call Schedule
Aug 2, 2012 10:00:00 AM
Copyright Business Wire 2012
HOUSTON--(BUSINESS WIRE)-- Crimson Exploration Inc. (NasdaqGM:CXPO) today announced it expects to issue its second quarter 2012 earnings press release after the market close on Wednesday, August 8, 2012. In conjunction with the release, Crimson will conduct a conference call to discuss contents of that release on Thursday, August 9, 2012 at 8:30am Central Daylight Time.
Those interested in participating in the earnings conference call may do so by calling the following phone number: 888-299-7212, (International 719-457-2641) and entering the following participation code 8414201. A replay of the call will be available from August 9, 2012 at 12:00pm CDT through August 16, 2012 at 12:00pm CDT by dialing toll free 888-203-1112, (International 719-457-0820) and asking for replay ID code 8414201.
Crimson Exploration is a Houston, TX-based independent energy company engaged in the acquisition, development, exploitation and production of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, including approximately 18,500 net acres in Madison and Grimes counties in Southeast Texas, approximately 8,200 net acres in the Eagle Ford Shale in South Texas, approximately 11,000 net acres in the Denver Julesburg Basin of Colorado, and approximately 5,700 net acres in the Haynesville Shale, Mid-Bossier, and James Lime plays in San Augustine and Sabine counties in East Texas.
Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com.
Crimson Exploration Inc.
E. Joseph Grady, 713-236-7400
Senior Vice President and Chief Financial Officer
or
Josh Wannarka, 713-236-7400
Manager of Investor Relations and FP&A
Source: Crimson Exploration Inc.
----------------------------------------------
Crimson Exploration Inc.
E. Joseph Grady
713-236-7400
Senior
Vice President and Chief Financial Officer
or
Josh
Wannarka
713-236-7400
Manager of Investor Relations and FP&A
Timothy Smith
12 years ago
Crimson Exploration Inc. Announces Continued Woodbine and Eagle Ford Success, Provides Operational Update and Second Quarter Production
Jul 12, 2012 7:30:00 AM
Copyright Business Wire 2012
HOUSTON--(BUSINESS WIRE)-- Crimson Exploration Inc. (NasdaqGM: CXPO) announces today continued success in its Woodbine and Karnes County Eagle Ford programs, provides an operational update on its Liberty and Zavala County activity, and reports second quarter production ratio of 46% crude oil and liquids.
Madison and Grimes County, Texas
Crimson has approximately 18,500 net acres in Madison and Grimes counties, Texas, covering three areas the Company refers to as Force, Iola-Grimes, and Chalktown where it has been actively developing the Woodbine. The oil potential in all three areas has been confirmed by production tests. The Woodbine section in each of these areas has slightly different characteristics, including different sand lobes within the overall Woodbine section and it is expected that more than one well will be required in each area to optimize the best landing point and completion practices required to maximize production and recovery. Crimson is very encouraged by the results to date and confident that this area will deliver a multi-year inventory of impactful and superior rate of return oil projects which will contribute significantly to Crimson’s growth story.
Crimson estimates there are approximately 115 net potential drilling locations in its Woodbine acreage based on 160 acre spacing. Assuming Crimson’s average type curve EUR of 400 Mboe (90% oil and natural gas liquids) per location, total net potential in its Woodbine acreage is over 34 Mmboe, which represents more than five times Crimson’s net liquids reserves booked at year-end 2011.
In addition to the Woodbine activity, there is ongoing development by multiple operators surrounding Crimson’s acreage position within the Eagle Ford, Georgetown, Buda, and Glen Rose formations, all utilizing the same horizontal and multi-frac completion technology employed in the Woodbine.
In the Eagle Ford, recent wells drilled in adjacent Brazos, Robertson, and Leon counties have had IP’s in excess of 600 bopd. The Eagle Ford section across Crimson’s acreage position has similar reservoir characteristics, thickness, porosity, resistivity, and shows in existing wells. Assuming development on 80 acre spacing, the Eagle Ford could potentially add up to an additional 230 locations and 68 Mmboe of net potential to Crimson’s position.
The Georgetown was recently tested by an offset operator adjacent to Crimson’s Force acreage at an IP of over 700 bopd. The Georgetown is a 300’ thick carbonate section that has historically produced from both vertical and horizontal open-hole completions. The use of horizontal multi-frac completions potentially changes the Georgetown from a statistical play to a repeatable resource opportunity. Assuming development on 320 acre spacing, the Georgetown could potentially add up to an additional 58 locations and 17 Mmboe of net potential to Crimson’s position.
The evolution of the Buda Lime is very similar to that of the Georgetown, where recent wells employing horizontal multi-frac technology have resulted in IP’s of over 600 bopd. This technology potentially changes the Buda from a statistical play to a repeatable resource opportunity. Assuming development on 320 acre spacing, the Buda could potentially add up to an additional 58 locations and 17 Mmboe net potential to Crimson’s position.
Force Area – Madison County (approximately 5,750 net acres)
Since January 2009, over 50 wells have been completed in the Madisonville-West Field (Force area) using modern horizontal drilling and fracture stimulation completion techniques. These wells have targeted the same Woodbine sand that Crimson is developing in the Force area and have had average initial potential tests of approximately 600 bopd. Crimson’s type curve for the Force area, which considers lateral length and the perf and plug completion technique, uses an IP of approximately 800 bopd and an EUR of 400,000 barrels of oil equivalent to generate an IRR of greater than 80% at current oil prices. Crimson’s first two producing wells in the Force area have had an average IP of over 900 bopd. Based on these results, Crimson considers the Force area to be substantially de-risked.
Mosley #1H (84.3% WI): Crimson’s first horizontal Woodbine oil well in the Force area has produced a cumulative 128 Mboe in its first four months of production.
Pavelock #1H (2.7% WI): Produced a cumulative 80 Mboe in its first 70 days of production.
Grace Hall #1H (82.5% WI): Successfully completed and turned to production in early June at a gross initial production rate of 1,080 Boepd, or 884 barrels of oil, 61 barrels of natural gas liquids and 809 mcf of natural gas. The well was drilled to a total measured depth of 15,900 feet, including a 7,200 foot lateral, and was completed using 26 stages of fracture stimulation.
Payne #1H (92.1% WI): Has completed drilling operations reaching a total measured depth of 16,130 feet, including a 7,460 foot lateral. Completion operations have begun with production anticipated to begin in August.
Iola-Grimes Area – Grimes County (approximately 7,650 net acres)
The Iola-Grimes area is an active development in northwest Grimes County testing a stratigraphically older Woodbine sand not present in the Force area. The nearest offset horizontal well to produce from this Woodbine objective is approximately one mile northwest of the A. Yates #1H and has produced 179,000 barrels of oil in 10 months. The Yates success and successful delineation by the Covington-Upchurch well will substantially de-risk the Iola-Grimes area.
A. Yates (50.0% WI): Successfully completed and turned to production in early July at a gross initial production rate of 472 Boepd, or 397 barrels of oil, 32 barrels of natural gas liquids and 322 mcf of natural gas. The well was drilled to a total measured depth of 15,320 feet, including a 6,065 foot lateral, and was completed using 22 stages of fracture stimulation. The well continues to clean up.
Covington-Upchurch #1H (67.8% WI): Recently commenced drilling operations and is currently drilling at 4,200 feet towards a total measured depth of 15,500 feet, including a 6,000 foot lateral. This well replaces the previously disclosed Stuckey #1H well, which is now expected to be drilled at a later date.
Chalktown Area – Madison County (approximately 5,100 net acres)
The Chalktown area tests the Lewisville Sand, which is a lower Woodbine objective that has produced from vertical wells in the immediate area. Crimson has drilled and completed the Vick Trust #1H well (75% WI) which appears to be producing extraneous water, possibly in communication with a natural fracture. Crimson has been working to identify the source of the water within the wellbore so that those sections can be isolated in order to shut off the water production and better test the oil potential in this area. Initial production has indicated an oil-weighted reservoir and further results will be released once these issues are addressed and evaluated.
Vick Trust #1H (75.0% WI): Drilled to a total measured depth of 14,660 feet, including a 5,760 foot lateral, and completed using 21 stages of fracture stimulation. Production rate to date has been as high as 225 Boepd, or 140 barrels of oil, 38 barrels of natural gas liquids, and 285 mcf of natural gas.
Allan D. Keel, President and Chief Executive Officer, commented, “Crimson is pleased to announce the continued success of our Woodbine program and believe that our results provide the data points necessary to validate our acreage position in Madison and Grimes counties where we have over 18,500 net acres that includes 115 drilling locations in the Woodbine, and potentially as many as 346 additional locations in the Eagle Ford, Georgetown, and Buda formations.”
Mr. Keel continues, “Given the scale of our leasehold position we are confident that this area will generate significant value for the shareholders. Permitting and new well activity has increased dramatically in Madison and Grimes counties in recent months due to the liquids-rich characteristics of the multiple underlying formations and the ability to attain premium oil price realizations due to access to the Gulf Coast markets. We are very encouraged by the results to date and will continue to monitor new well activity to develop the best practices needed to maximize performance.”
Karnes County Eagle Ford Activity
Glasscock B #1H (90.7% WI): Successfully completed and turned to production in May at a gross initial production rate of 685 Boepd, or 545 barrels of oil, 70 barrels of natural gas liquids and 422 mcf of natural gas, on a 12/64th choke and 2,107 psi of tubing pressure. The well was drilled to a total measured depth of 15,295 feet, including a 4,380 foot lateral (approximately 1,080 feet shorter than our average Karnes County lateral due to lease configuration limitations), and was completed using 14 stages of fracture stimulation. Crimson has two more primary locations on 120 acre spacing that will likely be drilled in 2013, and is closely monitoring the ongoing success of downspacing activity by an offset operator for a possible downspace strategy for another nine to ten wells in the future.
Zavala County Eagle Ford Activity
KM Ranch #2H (50.0% WI): Crimson anticipates commencing completion operations during the middle part of the third quarter. As previously disclosed, Crimson delayed completing this well in order to further understand optimal completion techniques being developed by other area operators. One offset operator recently completed two Eagle Ford wells with initial production rates of over 900 and 1,400 boepd. Additionally, immediately adjacent to the Booth-Tortuga area where Crimson drilled the Beeler #1H well, three horizontal wells have been drilled into the Buda formation by a private company. Crimson will monitor the progress of these wells and determine a development plan for this potential resource in late 2012 or early 2013.
Liberty County Activity
Catherine Henderson A-6 ST (60.8% WI): Successfully sidetracked to a measured depth of 12,940 feet. Completion operations in the Upper Cook Mountain sand will begin in a few weeks with first production expected in August. The original well was lost due to mechanical problems and last produced in January 2012 at a gross rate of 8 Mmcfepd.
Second Quarter Production Update
Production for the second quarter of 2012 was approximately 3.7 Bcfe, or 40,432 Mcfe per day, achieving the upper range of production guidance of 38,000 – 41,000 Mcfe per day. Crude oil and natural gas liquids production averaged 46% for the second quarter, up 8% over the first quarter of 2012, and up 20% from the prior year quarter. In the past year, Crimson has successfully transitioned production from a natural gas weighted profile to a current production profile of an approximate 50/50 balance between crude oil and natural gas liquids and natural gas.
Crimson Exploration is a Houston, TX-based independent energy company engaged in the acquisition, development, exploitation and production of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, including approximately 18,500 net acres in Madison and Grimes counties in Southeast Texas, approximately 8,200 net acres in the Eagle Ford Shale in South Texas, approximately 11,000 net acres in the Denver Julesburg Basin of Colorado, and approximately 5,700 net acres in the Haynesville Shale, Mid-Bossier, and James Lime plays in San Augustine and Sabine counties in East Texas.
Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com.
ThreeSheets
13 years ago
HOUSTON--(BUSINESS WIRE)-- Crimson Exploration Inc. (NasdaqGM:CXPO - News) announced the successful completion of the Littlepage McBride #1 (53.0% WI), located in Karnes County, TX and targeting the Eagle Ford Shale, commencing production in the first week of April at a gross daily rate of 876 barrels of oil and 717 Mcf of natural gas on a 14/64th choke with 2,845 psi of flowing tubing pressure. The well was drilled to a total measured depth of 15,885 feet, including a 4,800 foot lateral, and was finalized, from spud to first production, in 70 days. The Littlepage McBride represents Crimson’s first well on its 1,250 gross acre position in Karnes County, which is adjacent to other significant drilling and producing activity in the oil window of the Eagle Ford play. The Company intends to follow its restricted rate philosophy, currently being utilized in the East Texas Haynesville play, in its Eagle Ford program and does not anticipate increasing the rate further, although the well performance to date suggests it is capable of much higher rates.
Allan D. Keel, President and Chief Executive Officer, commented, “The successful completion of the Littlepage McBride validates Crimson’s position in the oil bearing window of the Eagle Ford Shale in Karnes County. Given this initial success in Karnes County and current crude oil prices, Crimson plans to reallocate additional capital to accelerate drilling activities in Karnes County in 2011 to optimize cash flows and shareholder return on oil weighted opportunities. We have also been fortunate enough to have obtained scheduling commitments from our drilling and completion services providers that will enable us to pursue our drilling plans for all of 2011 without delay risks related to the tight market for those services.”
In Liberty County, TX, the Catherine Henderson #A-9 (66.0% WI) commenced production at the end of March at a gross daily rate of 9.6 Mmcfe, or 4.4 Mmcf, 578 barrels of condensate and 286 barrels of natural gas liquids on a 12/64th choke and 7,200 psi of flowing tubing pressure. This well was drilled to a total measured depth of 13,150 feet in the Cook Mountain formation. Crimson is currently drilling below 12,850 feet on the Catherine Henderson B-4 (64.0% WI) toward a total measured depth of 13,500 feet and is scheduled to spud the Catherine Henderson A-10 (66.0% WI) in May.
In our Bruin Prospect Area of San Augustine County, TX, we have successfully completed 14 stages of frac on the Kodiak #1 well (70% WI) in the Mid Bossier Shale and expect initial production to begin within the next two weeks. Completion operations have commenced in the Haynesville Shale formation on the Blue #1 well (70.7% WI), also in the Bruin Prospect Area, with initial production expected around the first of May.
We anticipate spudding the KM Ranch #1 well, our first Eagle Ford well in Zavala County, TX, by the beginning of May. We have approximately 4,675 gross acres (50% WI) in Zavala County that we believe to be prospective in the oil window of the Eagle Ford Shale. This operated well is expected to be drilled to a total measured depth of approximately 12,500 feet, with a projected 5,500 foot lateral.
Crimson Exploration is a Houston, TX-based independent energy company engaged in the acquisition, development, exploitation and production of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, approximately 12,000 net acres in the Haynesville Shale, Mid-Bossier, and James Lime plays in San Augustine and Sabine counties in East Texas, approximately 6,700 net acres in the Eagle Ford play in South Texas and approximately 11,000 net acres in the Denver Julesburg Basin of Colorado.
Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com.
ThreeSheets
13 years ago
CUERO - Members of the I-10 Corridor Association listened intently as Charles Cusack, vice president of exploration at Petrohawk Energy, talked about drilling in the Eagle Ford Shale.
"This is here to stay. We've got 150 wells now and we'll probably have 200 in the next year. We're going to be here, drilling, for years and years," Cusack said.
About 40 people met for their annual meeting at the Chisholm Trail Museum in Cuero on Friday morning.
Cusack spoke for an hour about drilling in Eagle Ford Shale, touching on everything from the fracking process that has opened up drilling possibilities in the area to the need for companies to get easements and leasing rights to properties so that they can get to the natural gas and oil located in the area.
Kay Lapp, executive director of the Cuero Chamber of Commerce, said she started looking for someone to speak to the group about the possible impact of drilling in the region after members started asking for information. Cusack has spoken at other clubs and organizations, Lapp said, and his ties to the area and training as an engineering geologist made him a good choice to speak to the group.
Cusack gave the group an overview of why people are drilling in the region, and what they, as landowners and residents, can expect in the future.
DeWitt County judge Daryl Fowler said he thought the meeting was informative.
"I think it's a very good idea to get this information out there, and what better way to do that than with someone who is vice president of exploration," Fowler said.
Barbara Hand, executive director of the Gonzales Chamber of Commerce, agreed.
"It was very interesting. All of our land is leased, so I'm learning everything I can about this," Hand said
ThreeSheets
13 years ago
NEW YORK, April 5 (Reuters) - NuStar Logistics, L.P. and TexStar Midstream Stream Services L.P. said on Tuesday they plan to build a new pipeline system to carry Eagle Ford Shale crude and condensate from south Texas fields to NuStar's Corpus Christi, Texas terminal, the latest in a series of pipeline expansions to make the crude accessible to the large refineries that dot the U.S. Gulf Coast.
Eagle Ford Shale is valued because it contains crude oil and natural gas that is rich in liquids that can be stripped out and sold for a premium to refiners.
Privately held TexStar will build and operate a 65-mile, 12-inch pipeline to carry 120,000 barrels per day of crude and condensate from the Eagle Ford Shale gas plays in southern Texas to Three Rivers, where NuStar will build a new storage facility.
The storage facility will be connected an existing 16-inch pipeline that will be able to carry 200,000 barrels per day into NuStar's Corpus Christi North Beach Terminal.
The terminal now has 2 million barrels of storage capacity and the Port of Corpus Christi has approved a land lease option agreement allowing for expansion on 15 acres contiguous to the existing property.
The projects are expected to be in service in the second quarter of 2012.
In February, privately-held Flint Hills Resources bought an oil storage terminal in Corpus Christi that would supply by 200,000 barrels per day of liquids from Eagle Ford.
Flint Hills, a wholly owned subsidiary of Koch Industries Inc, expects outbound waterborne shipments from the retrofitted facilities to Texas and Louisiana refineries begin by the middle of 2012.
Flint Hills owns and operates a 344,500-barrels-per-day refinery across the bay in Corpus Christi, Texas, which is already served by a pipeline from Ingleside.
Approval of another pipeline, to be constructed and owned by Koch Pipeline Co, was approved in December to carry Eagle Ford oil.
Magellan Midstream Partners (MMP.N: Quote) said in early March it was planning a new 180,000 bpd pipeline to carry Eagle Ford Shale liquids to refineries in Corpus Christi, Houston and Beaumont, Texas.
Construction is expected to take 14 to 18 months, the company said.
(Reporting by Janet McGurty; Editing by David Gregorio)
ThreeSheets
13 years ago
KARNES CITY — It was almost a half-century ago that John Braudaway had his first encounter with the hydrocarbon-soaked, deep shale formation that is turning a large swath of South Texas into one crazy boomtown.
"In 1962, I was roughnecking on a crew north of town. And when we drilled through the Eagle Ford shale, it kicked back on us with a lot of pressure. It took us three days to choke it off," he recalled.
"I told the geologist, 'You've got a good well here. Let's run 'er out.' But he said, 'Naw, it's that old Eagle Ford shale. It will produce for four or five days and then seal off,'?" said Braudaway, 71, who's still in the oil business.
But about a year ago, an extraction technology called hydraulic fracturing began unlocking the mineral riches held in the deep shale vault that runs from the Mexican border northeast for hundreds of miles.
These days, the Eagle Ford is the hottest play in the country, with some South Texas oil wells producing several thousand barrels a day as well as abundant flows of natural gas.
The play is creating jobs and sudden wealth in a chronically depressed region that long survived on cattle and agriculture, between periodic oil and gas booms.
In some areas, mineral leases that a few years ago went for a few hundred dollars an acre now are commanding $10,000 and up. For a fortunate few, monthly royalty checks can run to six figures and lease bonus checks are even larger.
"This place went from desolate to booming. There are quite a few millionaires now in Karnes County. They are being made every day," Braudaway said during a recent tour of the county.
Trip Ruckman, 66, president of the Karnes County National Bank, said deposits rose by $2 million a month last year, and now may be double what they were five years ago.
"What's good is that a lot of mineral interest around here is owned by small landowners and farmers," he said. "The wealth is getting spread around pretty well."
Ruckman said that after decades of lean times, no one is throwing the money around.
Fun to be flush
"It's fun. We're enjoying it, but a lot of people are not used to being flush. It's kind of unbelievable for most of them, and they are sitting on it to a large extent," he said.
Drilling figures at the Texas Railroad Commission tell the production story.
In 2008, the state issued 33 drilling permits for the Eagle Ford shale. In 2009, it jumped to 94, and last year it exploded, to 1,229 permits.
Correspondingly, sales tax collections are climbing by double digits in areas most affected by the play.
According to a recently published economic impact study by the University of Texas at San Antonio, the long-term regional implications of the boom are staggering.
"Under modest assumptions, by 2020 the Eagle Ford shale is expected to account for close to $11.6 billion in gross state product, $21.6 billion in total economic output impact and support close to 67,971 full-time jobs in the area," according to the executive summary.
'No Vacancy'
At ground level, the first fruits of the boom are everywhere.
In Kenedy, the State Motel has been booked solid for two years to oil company workers, and it likely will keep the "No Vacancy" sign up awhile longer. "We're gonna be full for the next five years," said manager Maria Munoz.
Just down the road is the Pecan Grove RV Park, one of many cropping up around the play.
Owner David Brodsky, 48, of Kenedy, one of the new Eagle Ford millionaires, financed it with oil and gas leases and bonuses. "The bonus money built this park. I've got a little over 100 acres leased, and they have nine months left to drill," he said.
With the Pecan Grove already full, Brodsky is building two more RV parks.
In Cuero, officials are planning a new 300-home subdivision to house oil field workers.
Lee's Steakhouse in Carrizo Springs - like most restaurants in the play - is regularly jammed with free-spending newcomers.
"These people work 16 to 18 hours a day in the field, and they are hungry. They've got money and they pretty much order whatever they want. We're packed every night," said owner Lee Vallejo, who has expanded his menu and business hours.
Because hydraulic fracturing requires tremendous amounts of water, cities including Carrizo Springs are trying to figure out how to turn treatment plant effluent into cash.
"The oil industry is paying about 50 cents a barrel right now for gray water, and we generate about a half-million gallons a day," City Manager Mario Martinez said.
The competition for mineral rights among the "lease hounds" who now are swarming over land records in county courthouses across South Texas has driven lease prices sky-high and caused some to take unusual risks.
"We're getting a lot of 'top-leasing,' where one company leases on top of another, betting that the first one won't be able to perform before the lease expires," said David Phillip, 61, a veteran Karnes County oil and land man.
Strain on the system
And because most leases lapse if drilling doesn't occur within three years, the landowners are hoping to cash in twice by signing a second lease with a company that's willing to gamble.
But the sudden influx of thousands of new workers and fleets of heavy oil field equipment also is taking a toll in lightly populated rural South Texas, causing traffic jams and ruined roads.
"We have constant traffic, day and night, big trucks and oil tankers. At the H-E-B and Wal-Mart, it's hard to find parking, and by 4 p.m., practically everything is gone from the shelves," said Carrizo Springs Mayor Ralph Salinas, who quickly noted that he isn't complaining.
Other problems are more serious and expensive.
"We have a lot of road damage, and while some of these oil companies are very good about working with us, others are not," said La Salle County Judge Joel Rodriguez. "We have a lawsuit with some of these oil companies over damage for $5 (million) to $7 million."
In Karnes County, traffic problems caused by 18-wheelers prompted county officials to call in a state police task force this year. "We weren't prepared for this," said County Judge Barbara Shaw, adding that the increased tax revenues needed to hire more deputies are a year or two away.
Alfred Pawelek, 81, a former Karnes County judge and businessman, said the Eagle Ford play is lifting a region that seemed on a relentless slide.
"When I went into the drive-in movie business here in 1950, we had 25,000 people in the county. When I got out in 1975, we were down to 12,000," he said. About 16,000 now live in Karnes County.
Good times always end
Many were just getting by before the boom, and as anyone who has spent a lifetime in South Texas knows, the good times always end.
"They keep talking about this being a 20-year shot for us, but the economy could crater or we could run into environmental problems," said Fowler, the DeWitt County judge. "Right now we're in the glory days, and as long as we watch our budget, we'll be safe."
ThreeSheets
13 years ago
Eagle Ford is opportunity, responsibility
David Porter
Corpus Christi Caller Times
Posted April 10, 2011 at 3:04 a.m.
In a time when media coverage is dominated by negativity and positive outlooks are scarce, I am pleased to report there is an economic boom under way in South Texas.
The Eagle Ford Shale, a vast oil and gas region, is rapidly becoming one of the largest domestic crude oil and natural gas discoveries in more than 40 years and through hydraulic fracturing and horizontal drilling technology, we can now reach the oil and gas formations under the Eagle Ford's dense rock. Roughly 50 miles wide and 400 miles long, the Eagle Ford spreads across Texas from the Mexican border covering 24 Texas counties. From San Antonio all the way down to Laredo, Texans are experiencing unprecedented economic growth.
To put this in perspective, the very first well was drilled in the Eagle Ford in 2008; just three short years later, the shale play supports nearly 13,000 full time jobs, paying over $500 million in salaries and can claim almost $3 billion in revenues. In Bexar County alone, close to 700 jobs have been created as a result of increased activity in the Eagle Ford region.
Furthermore, the Eagle Ford underlies mostly privately owned land. So in addition to job creation, there are a multitude of private landowners set to reap massive financial rewards in the form of royalty payments — further stimulating the economy. On top of which, the current rise in oil prices will lead to more drilling and increased productivity.
Let me be clear: This has the potential to be the single most significant economic development in our state's history.
On the other hand, we must not act with haste. We must develop this shale responsibly, finding the proper way to exploit these resources while ensuring environmental protection. We must heed the lessons learned from our neighbors to the North through the development of the Barnett Shale. We must do this the right way. The Railroad Commission has adopted temporary rules to regulate activity in the region and I am closely monitoring the situation. I plan to meet regularly with industry representatives and local government authorities to listen to concerns and make sure our staff is addressing them. My office stands ready to host open forums to discuss the issues facing your communities.
We are looking into creating an Eagle Ford Task Force comprised of representatives from affected communities, state and local government and industry. We need to stay ahead of pressing issues so we don't make the same mistakes we made in the Barnett Shale. I will not let the Railroad Commission be a silent partner in developing this trend.
For example, we know water is scarce in South Texas and we must protect the Carrizo-Wilcox Aquifer at all costs. Fortunately, the Railroad Commission has a comprehensive regulatory framework in place to protect groundwater. However, we need more boots on the ground and more trucks in the field to ensure our guidelines are being met and our drinking water remains safe. I pledge to focus my efforts in the coming months on bringing more Railroad Commission staff to the region.
The recent development in the Eagle Ford proves yet again the fundamental role the oil and gas industry plays in the Texas economy. Even the most modest projections show that by 2020 the Eagle Ford will support approximately 68,000 full-time jobs. We have an incredible opportunity to bolster our state's economy and it is my goal to ensure we develop this precious natural resource properly.
David Porter was elected to the Texas Railroad Commission last year.
db7
13 years ago
Crimson Exploration Announces Completion of Private Placement of Common Stock and Related Option
Press Release Source: Crimson Exploration Inc. On Wednesday October 27, 2010, 11:03 am
HOUSTON--(BUSINESS WIRE)-- Crimson Exploration Inc. (NasdaqGM:CXPO - News) announced today that it has entered into a private placement with American Energy Capital Corporation (“ACEC”), a private investor, whereby ACEC can purchase up to $30,000,000 of newly issued Crimson common stock at a purchase price of $5.00 per share in a two step transaction. Yesterday, Crimson completed the first step of the transaction and issued 4,250,000 shares of common stock, or 9.9% of the post-transaction outstanding shares, to ACEC for a total cash consideration of $21,250,000. Crimson also issued a 60-day option to ACEC. Under the option agreement, ACEC may acquire an additional 1,750,000 shares of a newly created series of preferred stock at $5.00 per share, for additional consideration of $8,750,000. The preferred stock will automatically convert into an equal number of Crimson common shares on or before December 31, 2010. Under the terms of the preferred stock, ACEC would have the right to appoint a director to the Crimson board of directors prior to conversion. If the option is exercised and the preferred shares are converted, ACEC would own approximately 13.4% of the outstanding shares of common stock of the Company. The Company intends to use the net proceeds from the private placement for general corporate purposes, including the continued development of its significant inventory of drilling prospects.
ACEC is the U.S. private equity investment subsidiary of Shanghai Zhong Rong Property Group, Ltd., a private multi-faceted Shanghai-based company with operations in real estate, energy, mining, commercial property management, and financial investments. Upon funding the first part of this investment, the Chairman and CEO of the Zhong Rong Group, Mr. Ni Zhaoxing, expressed his confidence that this additional capital will enable Crimson to more fully exploit its attractive asset mix of conventional properties and highly prospective resource plays.
Mr. Allan D. Keel, President and CEO of Crimson, commented, “Over the last several months we have gotten to know the members of the ACEC and Zhong Rong teams and believe that we share the same vision and excitement for the continued growth of Crimson; therefore, we are very pleased to welcome them as new investors in Crimson Exploration.”
The common stock being sold by the Company in this transaction will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws. Crimson expects to file a Current Report on Form 8-K describing this private placement in more detail, including as exhibits, copies of the related subscription agreement, option agreement, registration rights agreement and certificate of designations for the preferred stock.
Crimson Exploration is a Houston, TX-based independent energy company engaged in the acquisition, development, exploitation and production of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, approximately 12,000 net acres in the highly prospective Haynesville Shale, Mid-Bossier, and James Lime plays in San Augustine and Sabine counties in East Texas, approximately 9,300 net acres in the prospective Eagle Ford play in South Texas and approximately 11,000 net acres in the Denver Julesburg Basin of Colorado.
Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com.
Contact:
Crimson Exploration Inc., HoustonE. Joseph Grady, 713-236-7400
Alex G
14 years ago
Crimson Exploration, Inc. Announces Successful Drilling Results in San Augustine and Liberty Counties, Texas
Press Release Source: Crimson Exploration Inc. On Wednesday August 18, 2010, 12:36 pm
HOUSTON--(BUSINESS WIRE)--In San Augustine County, Crimson Exploration Inc. (NasdaqGM:CXPO - News) successfully completed its first operated well in the Bruin Prospect Area. The Grizzly #1 (55% WI) was drilled to a measured depth of 18,100 feet with an approximate 4,200-foot horizontal lateral in the Mid Bossier Shale and was completed with 14 frac stages. The Grizzly #1 continues to clean up and is currently producing at a gross restricted rate of approximately 11.5 MMcfd on a 16/64” choke with around 9,100 psi flowing casing pressure. In Liberty County, Crimson successfully completed the Schwarz #2 (65% WI) in the Lower Cook Mountain sand at approximately 15,100 feet. The well is producing at a gross rate of 5.4 MMcfd and 120 Bcpd on a 12/64” choke with flowing tubing pressure of 9,100 psi and has been flowing to sales for approximately one week. This well follows our recently announced Catherine Henderson A-7 well (66% WI) which has been producing since June at a rate of approximately 4.5 Mmcpd and 340 Bcpd. With the production additions from these two important wells, Crimson’s current daily net production has increased to approximately 41 Mmcfepd.
Mr. Allan D. Keel, Crimson’s President and CEO, stated, “With the successful completion of the Grizzly #1 well, Crimson has validated the reserve potential of the Mid Bossier Shale in its Bruin Prospect Area.” Mr. Keel went on to say “based on well performance, we could have flowed the Grizzly well at significantly higher rates but have decided to use industry-best practices for reservoir optimization to maximize ultimate recovery.” With respect to the recent successes in the Schwarz #2 and Catherine Henderson A-7 wells, Mr. Keel said, “The successful execution of our Liberty County drilling program continues to provide Crimson with the production and cashflow base that allows us to continue our Haynesville and Eagle Ford Shale development as well as pursue additional growth opportunities within our deep inventory of lower risk, high quality conventional prospects.”
The 11.5 MMcfd test rate on the Grizzly well is reflective of Crimson’s strategy that restricting rate and pressure drawdown on Haynesville and Mid Bossier Shale wells increases the Estimated Ultimate Recovery (EUR), results in a shallower and more stable decline curve, and delays the need for costly compression. Crimson adopted this strategy based on the experience attained by other operators in this trend, core studies that substantiate the loss of fracture conductivity at higher initial drawdown rates, and service company studies that indicate potential pinching off of available reservoir at higher production rates. Data from wells produced at restricted rates in the trend suggest that although this methodology provides lower production in the first few months of flow, the cumulative production curve compared to higher rate wells crosses in less than a year with the restricted rate wells flowing at higher rates and pressures at the point they cross, substantiating the belief that EUR is benefited at little to no loss of present value.
Since Crimson has chosen not to increase the rate on the Grizzly well above its current level, the company is providing two graphs which illustrate the performance and strength of this well to date.
Crimson now has three logged pilot holes in the Bruin Prospect area and is extremely encouraged by their results. The Mid Bossier Shale and Haynesville Shale gross thicknesses are approximately 300’ and 160’, respectively, and have rock qualities similar to those seen in the Haynesville Shale in the Louisiana Core area. The James Lime is similar in quality and thickness to that being actively developed in the County Line Field to the northwest.
Crimson currently continues to drill in the lateral section of the Gobi #1 (70% WI) in the Bruin Prospect Area. Completion operations are expected to begin in October. The Bengal #1 (37.5% WI), our first well in Crimson’s Tiger Prospect Area in Sabine County, is expected to spud in early September. The Halbert Trust #1 (29% WI) in our Fairway Farms Prospect Area in San Augustine County is expected to commence completion operations in October.
In Bee County, Texas, the Windham #1 test (20% WI) of the Eagle Ford Shale formation is currently drilling and is expected to be completed by mid October.
In Liberty County, the Catherine Henderson A-8 (66% WI) well is nearing its proposed total depth of 13,500 feet and appears successful based on preliminary mud log analysis. Once drilling and completion operations are finished, we anticipate first production by early September.
Crimson Exploration is a Houston, TX-based independent energy company engaged in the acquisition, development, exploitation and production of crude oil and natural gas, primarily in the onshore Gulf Coast regions of the United States. The Company owns and operates conventional properties in Texas, Louisiana, Colorado and Mississippi, approximately 12,000 net acres in the highly prospective Haynesville Shale, Mid-Bossier, and James Lime plays in San Augustine and Sabine counties in East Texas, approximately 8,800 net acres in the prospective Eagle Ford play in South Texas and approximately 11,000 net acres in the Denver Julesburg Basin of Colorado.
Additional information on Crimson Exploration Inc. is available on the Company's website at http://crimsonexploration.com.
Pro-Life
14 years ago
US military warns oil output may dip causing massive shortages by 2015
• Shortfall could reach 10m barrels a day, report says
• Cost of crude oil is predicted to top $100 a barrel
Terry Macalister guardian.co.uk, Sunday 11 April 2010 18.47 BST
http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply
Surplus oil production capacity could disappear by 2012 a report from US Joint Forces Command, says. Photograph: Katja Buchholz/Getty Images
The US military has warned that surplus oil production capacity could disappear within two years and there could be serious shortages by 2015 with a significant economic and political impact.
The energy crisis outlined in a Joint Operating Environment report from the US Joint Forces Command, comes as the price of petrol in Britain reaches record levels and the cost of crude is predicted to soon top $100 a barrel.
"By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day," says the report, which has a foreword by a senior commander, General James N Mattis.
It adds: "While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India."
The US military says its views cannot be taken as US government policy but admits they are meant to provide the Joint Forces with "an intellectual foundation upon which we will construct the concept to guide out future force developments."
The warning is the latest in a series from around the world that has turned peak oil – the moment when demand exceeds supply – from a distant threat to a more immediate risk.
The Wicks Review on UK energy policy published last summer effectively dismissed fears but Lord Hunt, the British energy minister, met concerned industrialists two weeks ago in a sign that it is rapidly changing its mind on the seriousness of the issue.
The Paris-based International Energy Agency remains confident that there is no short-term risk of oil shortages but privately some senior officials have admitted there is considerable disagreement internally about this upbeat stance.
Future fuel supplies are of acute importance to the US army because it is believed to be the biggest single user of petrol in the world. BP chief executive, Tony Hayward, said recently that there was little chance of crude from the carbon-heavy Canadian tar sands being banned in America because the US military like to have local supplies rather than rely on the politically unstable Middle East.
But there are signs that the US Department of Energy might also be changing its stance on peak oil. In a recent interview with French newspaper, Le Monde, Glen Sweetnam, main oil adviser to the Obama administration, admitted that "a chance exists that we may experience a decline" of world liquid fuels production between 2011 and 2015 if the investment was not forthcoming.
Lionel Badal, a post-graduate student at Kings College, London, who has been researching peak oil theories, said the review by the American military moves the debate on.
"It's surprising to see that the US Army, unlike the US Department of Energy, publicly warns of major oil shortages in the near-term. Now it could be interesting to know on which study the information is based on," he said.
"The Energy Information Administration (of the department of energy) has been saying for years that Peak Oil was "decades away". In light of the report from the US Joint Forces Command, is the EIA still confident of its previous highly optimistic conclusions?"
The Joint Operating Environment report paints a bleak picture of what can happen on occasions when there is serious economic upheaval. "One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest," it points out.
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