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Production
Monitor Southeast / Gulf

March 2011
In the Spotlight
National Highlights and Key Points
Rig Count BPI
 Haynesville Surpasses Ft. Worth Basin (Barnett Shale) (Pg. 7)
2,136 3,087
Southeast Gulf  Chesapeake Haynesville Rig Count Could Drop by Half by Year-end (Pg. 9)
808 1,190  Fayetteville Shale Remains a Three-Company Play: BHP to Buy CHK’s Assets (Pg. 11)
 BPI on Steady Climb Up on Southwestern Efficiency Gains (Pg. 12)
Inside This Issue
 Newfield Moves West in the Woodford to Oil (Pg. 15)
ArkLa – Haynesville………………..........7
 Ft. Worth Basin Recovers from Cold Temps One Month Later (Pg. 19)
Arkoma – Fayetteville……………..... ...11
Arkoma – Woodford……………...........15  GMX Resources Extends East Texas Lateral Lengths to 6,000 feet (Pg. 23)
Fort Worth -Barnett ……………...........19
 New Schlumberger Technology Could Drop Petrohawk’s Eagle Ford Breakeven Price
East Texas………………………...........23
Texas Gulf Coast Onshore………........27 by 50 Cents (Pg. 27)
LA Gulf Coast Onshore ………….…....31  Eagle Ford May Have a Backlog of 500 Drilled Wells Awaiting Sales (Pg. 28)
ArkLa – Non-Haynesville………..…......33
Offshore …………………………….…...35  Slow Offshore Well Permitting Elicits Criticism, Asset Sales, Earnings Hits (Pg. 35)
Black Warrior ……………………….......39  Oil Likely the Emphasis in the Gulf for Foreseeable Future (Pg. 36)
AL-MS-FL………………………………..41

Old and New BENTEK Texas Production Sample


20

15
BENTEK Intrastate Pipeline
Data Is Now Incorporated in 10

Basin Forecasts 5

Bef ore Order 720 Af ter Order 720

Major BENTEK Data Upgrades Enhance Production Samples, Models


BENTEK production analysis now have dramatically enhanced detail in key areas, including Texas and Oklahoma.
Beginning in October, intrastate pipelines became subject to regulations that had previously only affected long-haul, interstate
pipelines. These intrastate pipes, with a few exceptions, are now required to post daily nominations data. BENTEK has
incorporated the data into its Data Warehouse and has recently begun to publish analysis of the data. The Production Monitor
series now reports new, more exhaustive samples of production in basins where intrastate pipelines are prevalent.
The aggregation of these new data are, to BENTEK’s knowledge, available nowhere else in the industry. The additional daily
information has enhanced BENTEK’s production models and serves as an important tool for corroborating production estimates
and quantifying daily movements in the supply picture—at the basin, regional, and continental level.
FERC, in its creation of the new regulation Order 720, cited a desire for market transparency in its decision to require the
disclosure from intrastate pipelines. This effect has been realized, especially in Texas. For example, BENTEK’s sample of
production on interstate pipelines in the Ft. Worth Basin totaled about 1% of total production. With the addition of intrastate
pipelines, the sample size is 91% (see Pg. 19). The total BENTEK sample now measures almost all of Texas production. This
improvement in Ft. Worth allowed BENTEK to precisely estimate the drop in production when cold weather struck the region in
early February. BENTEK subscribers were perhaps the only market participants with this insight.
Throughout this and future issues of this report, intrastate pipeline data will be displayed, as well as used to create more accurate
estimates of current and future production. In the future, as more history is collected, even more robust models will be created.
(continued, Pg. 3)
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Production Southeast / Gulf


Monitor March 2011
Breakeven Gas Price For New Drilling Economics Annual IP Additions of One Rig
80
$5.00
70 3Q2008 3Q2009 3Q2010
$4.50
60
$4.00

MMcf/d
50
$3.50
40
$3.00
$/Mcf

$2.50 30
$2.00 $1.84 20
$1.50 10
$1.00 -

Non-Haynesville
AL-MS-FL
Barnett

Black Warrior
Woodford
Texas Gulf Coast

East Texas
LA Gulf Coast
Haynesville

Fayetteville
$0.50

$0.00
Barnett Eagle Ford Anadarko- Arkoma - Eagle Ford
Haynesville Fayetteville Barnett
Combo (wet gas) Woodford Woodford (dry gas)
Breakeven $1.84 $2.78 $3.58 $3.66 $3.84 $4.03 $4.01 $4.49
12 Mo. Avg Cash Price $4.24 $4.36 $4.24 $4.24 $4.24 $4.24 $4.24 $4.36
12 Mo. FWD Curve $4.39 $4.39 $4.39 $4.39 $4.39 $4.39 $4.39 $4.39
HOR HOR HOR VER VER DIR HOR VER VER VER
Breakevens for liquids-rich plays assume $80 oil and 3:1 NGL value ratio.

BENTEK PRODUCTIVITY INDEX (BPI)TM: The effective rig count shown on the charts below illustrates the
rig level that is equivalent to the 1Q2005 actual rig count level. This week, the Southeast/Gulf is effectively
operating the equivalent of 1,190 rigs compared to the actual rig count of 808. This explains why production
has not fallen sharply, even though the active rig count is still much below its peak reached in 2008.

BENTEK Productivity Index: U.S. Total BENTEK Productivity Index: Southeast/Gulf


3,500 1,400

3,000 1,200

2,500 1,000
# of Rigs
# of Rigs

2,000 800

1,500 600

1,000 400

500 200

0 0

Actual Rig Count BPI Effective Rig Count Actual Rig Count BPI Effective Rig Count

Southeast/Gulf Dry Production Southeast/Gulf Production Flow Sample


45 25
40
35 20

30
Bcf/d

15
25.
Bcf/d

20
10
15
10
5
5
- 0

Other ARKLA East Texas Gulf Coast Of f shore Arkoma Ft. Worth Other ARKLA East Texas Gulf Coast Of f shore Arkoma

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Production Southeast / Gulf


Monitor March 2011

Production by Area (Dry - MMcf/d)


Reporting Area 11/01/10 12/01/10 01/01/11 02/01/11 03/01/11 04/01/11 05/01/11 06/01/11 07/01/11 08/01/11 09/01/11
AL-MS-FL 270 271 267 264 262 259 257 255 253 251 250
ARKLA - Haynesville 4,787 4,835 4,971 5,307 5,145 5,101 5,158 5,214 5,270 5,323 5,376
ARKLA - Non-Haynesville 343 423 439 428 417 407 398 390 382 375 368
Arkoma - Fayetteville 2,655 2,656 2,683 2,711 2,735 2,760 2,784 2,807 2,829 2,852 2,873
Arkoma - Woodford 1,465 1,475 1,474 1,474 1,473 1,471 1,471 1,471 1,472 1,473 1,474
Black Warrior 304 302 300 299 298 297 297 296 295 295 294
East Texas 4,478 4,498 4,519 4,627 4,643 4,657 4,670 4,681 4,692 4,702 4,711
Ft. Worth 5,514 5,598 5,644 5,760 5,808 5,855 5,901 5,944 5,988 6,032 6,078
Louisiana Gulf Coast 851 851 850 849 848 847 846 845 845 844 843
Offshore 5,973 6,000 5,959 6,010 5,981 5,953 5,926 5,900 5,875 5,851 5,828
Total 26,640 26,910 27,107 27,729 27,610 27,608 27,706 27,802 27,900 27,996 28,094

Models Improve Using New Texas Sample


20

15

10 Previous Model
5 Miss
0

Bef ore Order 720 Af ter Order 720 Old TX Model

BENTEK Data Upgraded with Intrastate Flows (continued from Pg. 1)


Some of the new models have already yielded insights not previously possible. Consider again the freeze-offs
example above. Before the intrastate data was developed, BENTEK was confined to using a complex, multiple-
regression model for estimating daily production in Texas. Regression models are limited in that they are unable to
properly measure extreme events or those that have not before occurred. With BENTEK’s Order 720 sample, ―peak‖
events become obvious.
In the figure above, the dip in production is much more pronounced in the ―after‖ sample than in the ―before‖ sample.
Further, the ―after‖ sample was also able to convey a continued depression in production that the sample-plus-
regression (―Old TX‖) model missed.
There are a few idiosyncrasies regarding this new data that must be understood. First, the intrastate pipelines as a
group often do not post optional data to the same extent as the larger pipelines. Some interstate pipelines post
generous descriptions of meters as well as the operators. Certain intrastate pipelines have been more reticent. The
lack of information requires BENTEK to conduct deep research to explain the meaning of nominations.
Second, in some basins, BENTEK’s sample is now larger than actual production coming out of the basin. This can
occur for several reasons, but the most relevant is how BENTEK determines the geographical boundaries of plays.
Systems dedicated to gathering gas are categorically exempted from the Order 720 rules. One of these gathering
systems may collect gas in one county, but deliver it to a reporting pipeline in an adjacent county that is in a separate
production area (by BENTEK definitions). In these cases, the daily changes in the sample are still very useful in
determining the basin’s contribution to supply changes.
Beyond the content of the Production Monitors, BENTEK is developing new methods of estimating supply as well as
demand for total U.S. In the next several months, these new tools will premiere to clients in existing and new reports.

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Production Southeast / Gulf


Monitor March 2011

Drilling Orientation of Active Rigs Active Rigs by Well Class


1,400 1,400

1,200 1,200

1,000 1,000

800 800

600 600

400 400

200 200

0 0

Total Directional Horizontal Vertical Total CBM Gas Oil Oil & Gas

Southeast/Gulf Drilling Activity


Peak Rig Rig Count Current Rig
Basin Name Count, week as of Rig Count as Rig Count as Count as of Four Week Four Week Four Week YTD Avg YTD Avg
of 10/24/08 02/04/11 of 02/11/11 of 02/18/11 02/25/11 Avg LastYr Avg Chg YTD Avg Last Yr Chg
Texas Gulf Coast 259 233 239 Rig Activity
245 Highlights
238 239 170 69 207 133 74
Ft. Worth 240 114 115 118 120 117 116 1 128 119 9
XXXXXXX
ARKLA - Haynesville 93 118 117 118 117 118 131 -13 130 99 31
XXXXXXX
Offshore 148 111 111 109 113 111 121 -10 116 107 9
XXXXXX
East Texas 229 98 98 95 97 97 118 -21 111 110 1
Arkoma - Fayetteville 65 43 39 40 38 40 40 0 40 44 -4
Arkoma - Woodford 71 27 26 26 28 27 37 -10 33 35 -1
Louisiana Gulf Coast 36 27 28 28 27 28 23 5 24 20 4
AL-MS-FL 26 15 16 15 14 15 13 2 17 13 4
ARKLA - Non-Haynesville 22 15 12 11 11 12 7 5 10 7 3
Black Warrior 4 0 0 0 0 0 1 -1 3 3 0
Total 1,193 801 801 805 803 803 778 25 818 688 130

Top Operators - Well Class Top Operators - Orientation


Ranked on Total Active Rig Count Week: 02/25/11 Ranked on Total Active Rig Count Week: 02/25/11
CBM Gas Oil/Gas Oil Total Hor Dir Ver Total
1 Chesapeake 0 39 35 2 76 1 Chesapeake 75 0 1 76
2 Exxon Mobil 0 42 20 0 62 2 Exxon Mobil 44 6 12 62
3 EOG Resources 0 7 24 13 44 3 EOG Resources 36 1 7 44
4 Petrohawk 0 30 1 0 31 4 Petrohawk 31 0 0 31
5 Devon Energy 0 18 4 0 22 5 Devon Energy 19 1 2 22
6 Encana 0 21 1 0 22 6 Encana 18 4 0 22
7 Shell 0 8 12 1 21 7 Shell 9 8 4 21
8 Exco Resources 0 21 0 0 21 8 Exco Resources 20 0 1 21
9 Southwestern Energy 0 17 0 0 17 9 Southwestern Energy 17 0 0 17
10 Anadarko 0 4 12 1 17 10 Anadarko 14 2 1 17
11 ConocoPhillips 0 0 15 1 16 11 ConocoPhillips 14 2 0 16
12 Hilcorp Energy 0 5 6 2 13 12 Hilcorp Energy 7 3 3 13
13 B P Energy 0 2 10 0 12 13 B P Energy 7 2 3 12
14 Chevron 0 1 11 0 12 14 Chevron 1 6 5 12
15 El Paso 0 6 3 2 11 15 El Paso 8 1 2 11
Other Operators 0 123 218 65 406 Other Operators 159 80 167 406
Total 0 344 372 87 803 Total 479 116 208 803

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Production Southeast / Gulf


Monitor March 2011

Southeast/Gulf Regional Map

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Production Southeast / Gulf


Monitor March 2011

DISCLAIMER. THIS REPORT IS FURNISHED ON AN ―AS IS‖ BASIS. BENTEK DOES NOT WARRANT THE ACCURACY OR CORRECTNESS
OF THE REPORT OR THE INFORMATION CONTAINED THEREIN. BENTEK MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE
USE OF ANY INFORMATION CONTAINED IN THIS REPORT IN CONNECTION WITH TRADING OF COMMODITIES, EQUITIES, FUTURES,
OPTIONS OR ANY OTHER USE. BENTEK MAKES NO EXPRESS OR IMPLIED WARRANTIES AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
RELEASE AND LIMITATION OF LIABILITY: IN NO EVENT SHALL BENTEK BE LIABLE FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL,
OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFIT) ARISING OUT OF OR RELATED TO THE ACCURACY OR CORRECTNESS OF
THIS REPORT OR THE INFORMATION CONTAINED THEREIN, WHETHER BASED ON WARRANTY, CONTRACT, TORT OR ANY OTHER
LEGAL THEORY.
ICE PRICE DATA: ICE Index Data used herein is provided under BENTEK’s AGREEMENT FOR THE PROVISION OF INDEX DATA with ICE.
Recipients of this report acknowledge that the ICE Index Data and reports thereon are confidential and are proprietary trade secrets and data of
either Distributor or its licensors/suppliers. Recipients shall use best efforts to prevent the unauthorized publication, disclosure or copying of the
ICE Index Data. Recipient may use ICE Index Data solely for valid purposes related to its own internal business activities and for no other purpose.
NO WARRANTIES, LIABILITIES, OR OBLIGATIONS ARE ASSOCIATED WITH ICE INDEX DATA, INCLUDING WITHOUT PREJUDICE TO THE
GENERALITY OF THE FOREGOING, THE IMPLIED CONDITIONS OR WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, AND NON-INFRINGEMENT.
Forward basis and price data provided by NYMEX ClearPort.

Drilling Data provided in this report provided by DataWright


RigData, for more information, go to www.rigdata.com

Methodological Notes
The data in this report are derived from BENTEK Energy’s proprietary Energy Data Warehouse. BENTEK collects and monitors pipeline
nominations as posted on individual pipeline electronic bulletin boards (EBBs). BENTEK has assigned geographic and usage descriptions, such as
state, province, county, production region, customer type and connected party to more than 26,000 pipeline points. The descriptions assigned to
these pipeline data points enable users to monitor and forecast U.S. production, U.S. imports, U.S. LNG sendout, demand from multiple sectors
and storage injection and withdrawal activity.
BENTEK PRODUCTIVITY INDEX (BPI)TM: In order to quantify the effects of improved drilling and completion technologies along with the transfer
of rigs to unconventional plays with higher productivity, BENTEK has developed the BENTEK Productivity Index (BPI)TM. By benchmarking the
productivity of each operating rig in the 1Q2005, BENTEK quantified the effects of both technology and gas-resource-play development.
BENTEK defines an active rig to be a rig that has commenced drilling a well (spud) until the point at which the rig has been released from the well
in order to allow completion activities.
The BPI is determined by a combination of rig proficiency and well productivity. BENTEK begins with data provided by RigData on how many rigs
are actively drilling in a basin or region and the average number of days it takes for those rigs to drill wells. The average number of days is divided
into 365 days per year to find an average number of wells drilled per year per rig. The wells-per-rig-per-year number is multiplied by the 30-day
initial production rate for the basin or region to determine the average productivity rate for the current time period. That number is then divided by
the baseline productivity rate from 2005 to get a ratio. BENTEK then multiplies the ratio by the current rig count to estimate the BPI.
Numbers from individual basins and regions are averaged to determine a national average.
BREAKEVEN PRICES: BENTEK defines breakeven gas prices as the well-head gas price at which the before-tax, cash internal rate of return
(IRR) on the project is 10% (the net present value is zero at a 10% discount rate). BENTEK collects announced production data for the key
operators in selected natural-gas plays/basins. Data sources include investor presentations, press releases, reported financials and industry
publications. Breakeven prices are determined using a representative set of assumptions for each play.
BENTEK’s breakeven prices are based on half-cycle well economics. The half-cycle breakeven price is the gas price required to earn the required
rate of return excluding previously sunk capital, such as exploration and acreage costs. The components of the breakeven analysis are Drilling and
Completion (D&C) costs, Initial Production (IP) rates, Operating costs, Production Taxes, Annual Production Declines and Royalty rates. D&C
Costs are the costs to drill, case and prepare a well for gas production. The IP rate is the amount of gas initially produced from a well. The
Operating costs include lease operating expense, and gathering and transportation costs. The Production Tax, also referred to as Severance Tax,
is the tax levied by state governments on gas production. The Annual Production Decline is the natural decline in gas production from a well. The
Royalty rate is the fraction of revenue from gas production paid to the leaseholder.
BENTEK's PRODUCTION PROJECTIONS are based on state wellhead production data provided by HPDI, LLC. Each projection starts from the
last completed dataset and then projects production into the future using type-curves for each basin based on drilling orientation and resource
target.
BENTEK does not assume a base decline rate in its production projections. Production is forecasted on a well-by-well basis based on the current
producing age of each well and where production from that well is on its current decline curve. Well counts are assumed to be flat from the previous
month's drilling level, except where noted due to basins with an inventory of wells that are awaiting pipeline expansions and/or completions

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Production Southeast / Gulf


Monitor
ArkLa – Haynesville March 2011
In the Spotlight
Rig Count BPI
• Haynesville Surpasses Ft. Worth Basin (Barnett Shale) (Pg. 7)
117 632
• Haynesville Productivity Set to Increase Throughout 2011 (Pg. 8)
• Chesapeake Haynesville Rig Count Could Drop by Half by Year-end (Pg.
9)

Average Monthly Projections and Flow Sample (MMcf/d)


Units (MMcf/day) 11/01/10 12/01/10 01/01/11 02/01/11 03/01/11 04/01/11 05/01/11 06/01/11 07/01/11 08/01/11 09/01/11
Current Projection 4,787 4,835 4,971 5,307 5,145 5,101 5,158 5,214 5,270 5,323 5,376
Interstate Sample 3,155 3,354 3,417 3,588 3,701 - - - - - -
Intrastate Sample 1,827 1,744 1,723 1,713 1,751 - - - - - -
Total Sample 4,982 5,098 5,140 5,301 5,452 - - - - - -
Last Month 4,838 4,970 5,034 5,097 5,157 5,216 5,271 5,325 5,380 5,430 5,480
* BENTEK Flow Sample 102% of Actual

Production Projection Haynesville Surpasses Ft. Worth Basin (Barnett Shale)


10.0

9.0
The first large shale play, the Barnett Shale, has for years
8.0
also been the largest producer. That changed last month.
7.0
After the effects of production freeze-offs lingered in the Ft.
Worth Basin, output from the Haynesville Shale play in
6.0
Louisiana grew. On Feb. 12, BENTEK’s sample of
Bcf/d

5.0
production (which now includes both intrastate and
4.0
interstate pipelines), reached 5.32 Bcf/d. On that same day,
3.0
Ft. Worth production, correcting for sample size, was only
2.0
5.23 Bcf/d. In the 11 days to follow, Haynesville kept its
1.0
lead. The Haynesville area now has the largest production
0.0 of any shale-dominated area in the world.
It is remarkable how fast Haynesville has grown compared
Interstate Sample Intrastate Sample to the Barnett. The latter was a proving ground for shale
development, and it took about nine years (cont’d, Pg. 9)
Current Projected Flows Last Month Projected Flows
Capacity

Non-completed Well Inventory Estimates: Haynesville (LA) Haynesville Beats Barnett

6000
140 450

400
120
5500
350
Well Inventory

100
Rigs, Wells

300
5000
80 250

60 200
4500
150
40
100 4000
20
50

0 0 3500

Inventory Projected InventoryBuild MonthlyAvgRigCount Arkla - Haynesville (LA) Ft. Worth

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Production Southeast / Gulf


Monitor ArkLa - Haynesville
BENTEK Productivity Index Production Receipts by Pipeline
800
4.5

700 4.0 This chart only


includes production
600 3.5 receipts on interstate
3.0
pipelines.

Bcf/d
Number of Rigs

500
2.5
400
2.0

300 1.5

200 1.0

0.5
100
0.0
-

Gulf South Centerpoint ETC Tiger Pipeline Other Tennessee Texas Gas
Actual Rig Count Effective Rig Count

Haynesville Productivity Set to Increase Throughout 2011


The Haynesville Shale is poised to see significant gains in productivity in the next several months. BENTEK has
already noted that the number of rigs has been declining (see chart above, left), yet more wells than ever are
being drilled. The “horizontal” section of the below tables shows why. From 3Q2010 to 4Q2010, the average time
to drill a well shrunk from 44 days to 38 days. The number of wells increased, from 211 to 233. Multiplying these
two variables, we can see that rig-days fell 4.6% quarter-on-quarter, yet 10.4% more wells were drilled. Wells are
being drilled faster, but the initial-production rates have not yet shown improvement. This will likely change as
operators end lease-capture activities and settle in to the highest-IP areas (see Pg. 10). Next month’s report will
include results from 4Q2010, but the IP increase likely is only just beginning to happen and will gradually increase
into the beginning of next year.
Horizontal Drilling
2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4
Average Time to Drill 64 60 51 49 48 47 46 48 44 38
Time to Drill Sample 32 61 70 116 152 195 219 222 211 233
30-Day Inital Production Rate (Mcf/d) 5,593 7,886 7,439 8,934 9,436 9,996 9,292 9,356 8,416 6,322
IP Sample 15 18 48 59 92 113 144 157 159 10
IP Additions Per Year 31,898 47,973 53,240 66,549 71,753 77,629 73,730 71,145 69,815 60,724

Directional Drilling
2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4
Average Time to Drill 49 54 43 52 46 33 40 33 22 55
Time to Drill Sample 19 20 26 9 6 6 7 5 1 4
30-Day Inital Production Rate (Mcf/d) 2,469 6,250 3,779 4,690 5,117 4,824 7,897 7,209 8,766 -
IP Sample 17 10 19 26 12 6 11 7 2 -
IP Additions Per Year 18,392 42,245 32,078 32,920 40,602 53,356 72,060 79,736 145,436 -

Vertical Drilling
2008-Q3 2008-Q4 2009-Q1 2009-Q2 2009-Q3 2009-Q4 2010-Q1 2010-Q2 2010-Q3 2010-Q4
Average Time to Drill 21 20 21 20 23 24 23 31 24 28
Time to Drill Sample 192 144 61 23 22 9 13 10 8 10
30-Day Inital Production Rate (Mcf/d) 836 886 704 1,243 810 1,124 3,121 1,977 888 1,082
IP Sample 172 153 108 37 13 22 12 11 13 2
IP Additions Per Year 14,530 16,170 12,236 22,685 12,854 17,094 49,529 23,278 13,505 14,105

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Production Southeast / Gulf


Monitor ArkLa - Haynesville

Rig Count Summary Haynesville vs. Barnett (cont’d from Pg. 7)


Active Rigs
to climb to 5.0 Bcf/d from the time shale
Operator Peak Prior 4 Week Week Ending Week Ending Week Ending Week Ending
production began in earnest. For the
04/02/10 Average 02/04/11 02/11/11 02/18/11 02/25/11
Chesapeake 35 31 31 32 32 32
Haynesville, it took less than three years. The
Petrohawk 17 16 18 20 20 20 rapid growth is evidence of learning occurring in
Encana 23 16 16 15 15 14 the industry, and the learning is still ongoing.
Exco Resources 13 13 15 15 14 14 Operators are experimenting with new frac
Shell 7 9 10 9 9 9 designs, drilling methods, and reservoir
El Paso 9 5 5 5 5 5 management. With increasing drilling
Questar 6 5 5 4 4 4 efficiencies, other, newer plays are set up for
Comstock Resources 8 4 3 3 3 3 robust growth. The Eagle Ford, Barnett Combo
Exxon Mobil 2 4 3 2 2 2 (liquids-rich area), and Marcellus Shale are
J-W Operating Company 2 1 2 2 2 2 those likely to benefit.
Other Operators 25 11 10 10 12 12
TOTAL 147 115 118 117 118 117 Chesapeake Haynesville Rig Count Could
Percent Change From Peak -20% Drop by Half by Year-end
Chesapeake said it will reduce the number of
rigs drilling in HBP (held by production) efforts
Top Operators
to only 18, compared to a current 23, by year-
Well Class
Ranked on Total Active Rig Count Week: 02/25/11 end. The draw-down appears to include CHK’s
CBM Gas Oil/Gas Oil Total eight Fayetteville Shale rigs, which should be
1 Chesapeake 0 29 3 0 32
2 Petrohawk 0 20 0 0 20 moved (or contracted to BHP Billiton, depending
3 Encana 0 13 1 0 14 on the sale terms) as CHK winds down its
4 Exco Resources 0 14 0 0 14
5 Shell 0 8 0 1 9 transition there. The remainder of rigs seem to
6 El Paso 0 5 0 0 5 be in the Haynesville. If so, CHK’s rig count in
7 Questar 0 4 0 0 4
8 Comstock Resources 0 3 0 0 3 this play could fall from its current 32 down to
9 Beusa Energy 0 2 0 0 2
10 Exxon Mobil 0 2 0 0 2
15 rigs before January 2012. The drop might
11 J-W Operating Company 0 2 0 0 2 not be this severe if some HBP rigs in other dry-
12 EOG Resources 0 2 0 0 2
13 W S 0 2 0 0 2
gas plays are idled, but there are not many
14 Samson 0 1 0 0 1 candidates that fit this description.
15 Nadel & Gussman - Jetta Operating 0 0 1 0 1
Other Operators 0 3 1 0 4
Total 0 110 6 1 117

Production Receipts by Point Operator


Active Rigs by Drilling Target
4.5

4.0 This chart only 160


includes production
3.5 140
receipts on interstate
3.0
pipelines. 120
Bcf/d

2.5 100

2.0 80

1.5 60

1.0 40

0.5 20

0.0 0

M 2 Midstream Louisiana Midstream Gas Services


Centerpoint Energy Field Services Chesapeake
Other Petrohawk Total CBM Rigs Oil Rigs Oil and Gas Rigs Gas Rigs

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Production Southeast / Gulf


Monitor ArkLa - Haynesville

Year-to-Date New Well Starts


Horizontal Directional Vertical Total
Gas CBM Oil & Gas Oil Gas CBM Oil & Gas Oil Gas CBM Oil & Gas Oil
Operator 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
Chesapeake 34 39 0 0 1 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 35 40
Exco Resources 31 13 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 31 13
Petrohawk 30 19 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 30 19
Encana 27 23 0 0 2 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 29 24
Shell 12 8 0 0 0 1 0 0 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 14 9
Questar 8 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 9 7
El Paso 7 8 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 0 7 10
Comstock Resources 6 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 6 9
Beusa Energy 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 5 1
Exxon Mobil 2 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 1
Other Operators 9 19 0 0 0 0 0 0 0 2 0 0 0 0 0 0 1 6 0 0 1 0 0 0 11 27
Total 171 146 0 0 3 1 0 0 1 4 0 0 0 0 1 0 2 9 0 0 1 0 0 0 179 160
Change from 2009 17% n/a 200% n/a -75% n/a n/a n/a -78% n/a n/a n/a 12%

Haynesville grew at a staggering rate last year,


and this year’s well starts are outpacing those of
2010. About 7% fewer horizontal gas rigs are in
operation, but they have produced 17% more
wells (see table above).

Top Operators
Well Orientation
Ranked on Total Active Rig Count Week: 02/25/11
Hor Dir Ver Total
1 Chesapeake 32 0 0 32
2 Petrohawk 20 0 0 20
3 Encana 14 0 0 14 Drilling Orientation of Active Rigs
4 Exco Resources 14 0 0 14
140
5 Shell 7 2 0 9
6 El Paso 4 0 1 5 120
7 Questar 4 0 0 4 March 2008:
8 Comstock Resources 3 0 0 3 100 Chesapeake announces
9 Beusa Energy 2 0 0 2 Haynesville discovery
80
10 Exxon Mobil 2 0 0 2
11 J-W Operating Company 2 0 0 2 60
12 EOG Resources 2 0 0 2
13 WS 1 1 0 2 40

14 Samson 1 0 0 1
20
15 Nadel & Gussman - Jetta Operating 0 0 1 1
Other Operators 2 0 2 4 0
Total 110 3 4 117

Horizontal Rigs Directional Rigs Vertical Rigs

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