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Burlington takes on shale, expands acreage Moves out of core area of Barnett Shale, into frontier area of Texas Ray Tyson Petroleum News Houston Correspondent
Typically conservative exploration and production independent Burlington Resources has stepped out of the relative safety of the Barnett Shale core area in East Texas and into a riskier and less understood sector of the huge field, among the hottest natural gas plays in the United States.
“As you know, Burlington has not participated in the land frenzy that occurred outside the core area,” Randy Limbacher, Burlington’s chief operating officer, reminded industry analysts in a July 29 conference call.
Nevertheless, he said the big natural gas producer agreed to buy leases that would expand the company’s overall Barnett Shale position to about 72,000 acres, 44,000 acres of which is situated outside the field’s primary producing area in Parker, Hood and Johnson counties.
“These assets have all the attributes that we like in that they’re concentrated and chunky and are located in areas where horizontal drilling has already proven to be effective,” Limbacher explained. Part of $200 million acquisition Burlington included the Barnett Shale field near Fort Worth in an overall $200 million property acquisition package totaling about 300,000 acres, largely located in various areas in the United States and Canada where the company already has production, including the prolific Bossier gas play, also in East Texas.
Limbacher would not say just how much Burlington agreed to pay for the non-core acreage in the Barnett Shale. However, he did say the company negotiated a deal with an undisclosed seller that was “quite a bit less than what industry has been paying in general.”
Burlington intends to run six drilling rigs in the Barnett Shale, up two from the company’s current four-rig program, Limbacher said, adding that the company has identified some 215 drilling locations on the non-core acreage.
“We’ve got … potential well bores that we feel fairly confident about in the inventory,” he said. “We’ve got 3-D seismic coverage over about 65 percent of that position already.”
Burlington currently produces daily about 75 million cubic feet of gas equivalent from its 28,000-acre core area in the Barnett Shale. Devon Energy, another big exploration and production independent, is the largest Barnett Shale producer with more than 500 million cubic of gas equivalent per day. Other large producers include independents EOG Resources and XTO Energy. Company opened lower gas play Burlington, credited with opening a lower gas play in the southern Bossier trend of East Texas, is poised to increase gas reserves on its acreage there beyond the current estimate of 500 billion cubic feet. That estimate already is supported by results from wells drilled into the lower Bossier, Limbacher said.
However, he also said the company has delineated less than half of its 29,000-acre focus area in the Savell field in Robertson County. In total, Burlington holds more than 130,000 acres in the overall Bossier play, much of it unexplored.
“So a lot of it is concentrated there (Savell) because that’s where we are right now,” Limbacher said. “We certainly believe there’s (reserve) potential beyond that.”
But Limbacher said more tests will be required before Burlington alters the reserve estimate for the Bossier. “I think before we kinda get happy about going over the 500 number, I want to start seeing what the rest of the exploration results look like,” Limbacher said. Production up in lower Bossier Gross natural gas production from the Burlington-operated lower Bossier play in the 2005 second quarter averaged 160 million cubic feet per day, up a healthy 60 percent from an average 100 million cubic feet per day during the previous quarter.
The big independent, which had six wells producing from the lower Bossier by the end of the 2005 first quarter, drilled an additional four wells in the second quarter, two of which are currently producing.
Burlington also drilled and logged its first exploration well in the Bossier during the second quarter to test an area outside the current producing play, and is currently drilling a second exploration well outside Savell. The company is running a four-rig program in the Bossier and said it plans to add a fifth rig in August.
“I will tell you, as far as the log characteristics, we feel good that it is a nice looking sand, and we think it will be productive,” Limbacher said. “But we’ll have to test it to find out for sure.”
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