COMSTOCK TEMPORARILY PULLS OUT OF TMS; WILL DRILL HAYNESVILLE/BOSSIER SHALE INSTEAD

COMSTOCK RESOURCES, INC. ANNOUNCES
2015 EXPLORATION AND DEVELOPMENT BUDGET

FRISCO, TEXAS, December 18, 2014 - Comstock Resources, Inc. ("Comstock" or the "Company") (NYSE: CRK) announced that it has budgeted $307 million in 2015 for its drilling and completion activities.  In response to low oil prices, the Company plans to suspend its oil directed drilling activity in its Eagle Ford shale properties in South and East Texas and in the Tuscaloosa Marine shale in Mississippi.  Comstock has released its rig in the Tuscaloosa Marine shale and will postpone its drilling activity there until oil prices improve.  Comstock currently has four operated rigs drilling on its Eagle Ford shale properties.  The Company will release two of these rigs in early 2015 and will move the other two rigs to North Louisiana to start up a drilling program on its Haynesville shale natural gas properties. Comstock believes that improved completion technology, including longer laterals, will provide strong returns on drilling projects at current natural gas prices.

Comstock has budgeted to drill 19 (18.6 net) horizontal wells in 2015.  The Company expects to spend $161 million for drilling 14 (14.0 net) Haynesville/Bossier shale natural gas wells and $34 million for drilling five (4.6 net) wells on its East Texas and South Texas Eagle Ford shale acreage.  The 2015 budget includes $49 million for completion costs of 13 (11.9 net) Eagle Ford shale wells that were drilled in 2014 but will be completed in 2015 and $63 million on facilities, recompletions and for other capital projects.  Comstock plans to refrac ten of its existing Haynesville shale producing wells as part of the 2015 program.

Comstock estimates that the drilling program will generate Company-wide oil production of 3.5 to 3.9 million barrels in 2015 and natural gas production of 55 to 60 Bcf.  After three years of natural gas production declines, 2015 will mark a turnaround for the Company's natural gas production.  The Company will continue to assess the oil and natural gas markets throughout 2015 and will adjust its drilling program to reflect the appropriate mix of oil and natural gas wells in order to maximize returns.

http://phx.corporate-ir.net/phoenix.zhtml?c=101568&p=irol-newsA...

 

Views: 2379

Reply to This

Replies to This Discussion

That's very interesting.  I figured that we wouldn't see any more drilling for gas until we had a sustained $5mcf or so. Isn't the Haynesville about $3.75 to break even?

fascinating.  For years now, the E&P companies have been running from NG into the oil or liquids prospects, but the price of crude, driven by global eco-politics, is now the risky investment.  So, NG, while lacking glamour, is the steady commodity that Comstock is returning to.

Less flash, but steady cash, shall we say.

Core and Tier One Haynesville acreage has a cost to produce an mcf a good bit lower than $3.75.  Leases are HBP, infrastructure is in place and paid for and pad drilling and Cross Unit Laterals make  for a less risky development investment.  A decline in demand for field services related to oil will help all NG operators reduce their cost. Keep in mind that it will take some time for new drilling programs to get underway and will not result in new completions until later in 2015.  The industry opinion on future pricing is so so but stable in 2015 but thought to be improving in 2016 when much of the new gas production will be sold.

The wild card in the equation for NG pricing over the next few years is, how much gas from lower cost plays will be available to end users in the same market served by Haynesville/Bossier operators?  Marcellus NG could likely be sold at a moderate profit between $2 and $2.50/mcf.

Another wild card for Marcellus shale is that the new Democrat PA governor ran on a promise to make energy companies pay more taxes.  Now that it is coming out that the old Republican governor left the state with a $2B budget gap for next year, the cry to tax the energy companies will be even louder.  Depending on the tax increase, the economics of PA Marcellus NG could change. 

This is from a PA budget org

Pennsylvania would benefit from switching from its current impact fee to a severance tax. Depending on the estimate, the severance tax could raise two to four times as much revenue as we expect from the impact fee, with this difference growing over time.

Whether the revenue gain from switching to a severance tax is $400 million, $600 million, or more, this is exactly the type of recurring revenue needed to help restore harmful cuts to our schools, help bridge an estimated $2 billion funding gap in 2015-16, and help close the state’s ongoing structural deficit where revenues grow more slowly than spending.

 

It's unlikely that a severance tax would change the F&D costs enough to make Marcellus gas more than Haynesville even with higher transportation costs.  IMO PA should have a severance tax on NG just as Louisiana does.

http://dnr.louisiana.gov/assets/TAD/data/severance/la_severance_tax...

Another question is that many other NG areas, like the Marcellus, are profitable because they are "wet" gas, but with the 50% decrease in oil prices, what has happened to NGL prices?

NGL prices have dropped but not to the extent that crude has declined. 

December 9 Mont Belvieu Hub Prices
Week Eth Pro Norm Iso Pen+ NGL Bbl
Dec 9 15.62 57.76 78.40 79.22 130.58 $24.37
Dec 2 19.52 69.30 92.10 93.07 141.20 $28.16
Nov 25 19.70 74.65 99.55 101.53 152.20 $30.18
Nov 18 21.94 80.74 107.52 110.50 150.16 $31.77

Thanks for the info.

Wall Street didn't like Comstock's decision to move to NG as its stock was down 13%, while most energy companies were up.  I think that Comstock's decision to move away from the Eagle Ford, reminded investors that the Eagle Ford is not a uniform play and just like the Haynesville there are different tiers of acreage.

Any of you know when and what area Comstock plans on resuming drilling?

In the past, there was a monthly update of drilling rig locations for the HS on this site.  Is that still maintained?  I couldn't locate it.

Nope.  I didn't.  But it's taken care of now.  Thanks

I don't know when but I do know where.  Steve, there hasn't been an active drilling location discussion group since Les B. stopped posting in 2012.  And I'm far too busy to post a comprehensive listing so just ask for specifics from time to time and I'll try to help.

Comstock has one rig running (H&P #197) currently drilling the Pyle 6-7HC #1 Alt.  Here is the list of their current permits including the Pyle.  They are all in DeSoto Parish in the following fields:  Spider, Logansport and Belle Bower.

248504

HA RA SUU;PROVOST ETAL 30 HZ

001

01

8575

01-OCT-14

030-12N-14W

248505

HA RA SUAA;WR BILLINGSLEY 2 HZ

001

01

8575

01-OCT-14

002-11N-14W

248506

HA RA SUZ;HODGES LND TBR 32 HZ

001

01

8575

01-OCT-14

032-12N-14W

248507

HA RA SUT;QUINN PINE TMB 25 HZ

001

01

8575

01-OCT-14

025-12N-15W

248508

HA RA SULL;E C MCCOY 34 HZ

001

01

6156

01-OCT-14

034-12N-15W

248509

HA RA SUNN;WILLIAM J TODD 2 HZ

001

01

6156

01-OCT-14

002-11N-15W

248510

HA RA SUOO;MCM HOLLOWAY 1 HZ

001

01

6156

01-OCT-14

001-11N-15W

248549

HA RA SUMM;MILTON HARRIS 35 HZ

001

01

6156

07-OCT-14

035-12N-15W

248827

HA RA SUH;PYLE 6-7 HC

001-ALT

01

1408

22-DEC-14

031-13N-16W

thanks, as always, Skip.  all of the other permits are for a block of adjacent sections Comstock obtained from BP.  there are some pretty decent HA wells surrounding this block. I don't think that these sections are in the Tier 1 or Core area of the HA, but it is unusual that neither BP nor Comstock has drilled any of those sections.  All are HBP with more shallow wells, mostly Hosston.   At 1/8 royalty, of course.

RSS

Support GoHaynesvilleShale.com

Not a member? Get our email.

Groups



© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service