Kohlberg Kravis Roberts & Co LP will participate with Comstock Resources Inc., Frisco, Tex., in future Eagle Ford shale development in South Texas.
KKR will have the right to participate for one-third of Comstock’s working interest in wells drilled on Comstock’s 28,000 net acres in Atascosa, Frio, Karnes, LaSalle, McMullen, and Wilson counties. KKR will pay $25,000/acre through a drilling carry for the net acreage being acquired.
Comstock expects to ultimately develop most acreage on 80-acre spacing. The agreement applies to wells spudded by Comstock on or after Mar. 31, 2012. Comstock will retain all of its interest in wells spudded before that date.
Subject to certain conditions, KKR committed to provide drilling carry equivalent to $25,000/acre for the next 100 wells drilled on Comstock’s Eagle Ford shale acreage and can continue to participate in additional wells drilled on the acreage for the same drilling carry.
Comstock said the transaction “will provide the capital necessary to accelerate drilling of this exciting oil play, while still allowing us to have the capital to develop our Wolfbone properties in West Texas.”
Separately, Comstock said it spent $314.3 million on development and exploration and $16.1 million on acreage and other acquisitions in the first half of 2012.
Comstock drilled 39 gross, 31 net wells and was drilling five gross, 3.6 net wells as of June 30. In the quarter ended June 30 the company drilled eight gross, 7.2 net oil wells in West Texas and eight gross, seven net wells in the Eagle Ford shale.
As of June 30 the company’s six operated drilling rigs were drilling oil wells in South Texas and West Texas because Comstock has suspended gas drilling until natural gas prices improve.
Since the beginning of 2012, the company has completed 15 oil wells in the vertical Wolfbone program and 16 in the horizontal Eagle Ford program. The 16 Eagle Ford wells averaged 565 b/d of oil equivalent initially.
Of the eight Eagle Ford wells completed in the latest quarter, the Donnell C 1H, Carlson C 1H, and Hubberd 3H in McMullen County had the highest initial rates at 938, 862, and 793 boe/d, respectively, and are being produced under the company’s restricted choke program. Longer term production results from the first 29 Eagle Ford shale wells have confirmed the benefit of this program.
The 29 wells, which have been producing for more than 90 days, averaged an initial 679 boe/d. The 30-day production rate for these wells averaged 514 boe/d, and the 90-day rate averaged 453 boe/d or 67% of the initial 24-hr test rate.
Since closing on the acquisition of acreage in Reeves County, Tex., Comstock has drilled and completed 13 operated vertical Wolfbone wells to total depths of 11,370-12,786 ft and completed them with 5-11 frac stages for an average initial 374 boe/d/well, 78% oil.
Comstock’s vertical Wolfbone wells continue to be some of the best vertical oil wells in the play. Of the eight new wells reported on this quarter, three had initial rates above 400 boe/d including the Pat Garrett 38-1 at 489 boe/d, Buffalo Bill 9-1 at 517 boe/d, and Trigger 40-1 at 419 boe/d. Comstock’s first horizontal well targeting the Wolfcamp shale, Monroe 35 1-H, is drilling.