FBR Analyst Compares 5 Shales
Rehan Rashid, the managing director and head of energy research at FBR (Friedman, Billings, Ramsey & Co. in Arlington, Virginia), spoke in Houston on July 16 about his macro energy views, and he threw in many tidbits about shales.
Rashid has done a bottoms-up analysis of 5 key U.S. shale plays in the news: Haynesville, Marcellus, Woodford, Fayetteville and Barnett. He said they stand to generate massive returns and NAV growth for the main E&P companies involved. He wonders about execution of the huge drilling plans being announced by the E&Ps chasing shales. He is not worried, however, about rig availability–his concern is tubulars, frac capacity and other equipment prices.
Rashid interviewed shale-oriented CEOs and geologists, studied company reports on drilling plans, well spacing, estimated ultimate recoveries (EURs) per well, gas in place, 3P reserves and other metrics to come up with this:
3P reserves in each play: Haynesville 120 Tcf, Marcellus 68 Tcf, Barnett 55 Tcf, Fayetteville 25 Tcf and Woodford, 14 Tcf.
Recovery factor in each play: Haynesville 20.4%, Marcellus 19.1%, Barnett 13.4%, Fayetteville 20.5% and Woodford 39.5%.
Estimated total U.S. gas-shale wells drilled in 2006: 1,000. Shale wells to be drilled in 2008: 2,000. Shale wells to be drilled in 2010: nearly 5,000.
”Too much NPV is at stake, so these company CEOs will not let it go by. They will figure out how to produce these shales. I estimate there are about 275 rigs drilling in gas shales right now and we could get to 600 rigs by 2018.”
–Leslie Haines, Editor-in-chief, Oil and Gas Investor, lhaines@hartenergy.com
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July 17th, 2008 at 4:37 pm
The recovery factor using current techology and excluding refracturing in the Barnett Shale is estimated at 25% not 13.4% as shown and the Haynesville & Marcellus estimates of recovery are without any foundation in production as both are too new to call.
As for the number of shale wells to be drilled in the US, there are already more than 1,000 new producers in the Barnett Shale for the first half of 2008 in the Fort Worth Basin so those numbers presented for all shale are very conservative and low as the Barnett Shale is on track to have 2,000 new wells in the Fort Worth Basin alone.