By the OGJ Online Staff
HOUSTON, Apr. 25 -- A regulatory decision permitting Barrett Resources Corp. to reduce spacing and drill 202 more wells on 16,000 acres of federal lands in the Piceance Basin will add 212 bcf of proved gas reserves simply because of the physical properties of those tight sands, a company executive said Wednesday.
"It's the nature of those reserves," said Frank Keller, executive vice-president and CFO of the Denver-based independent, in an interview with OGJ Online.
Although those wells have yet to be drilled, Keller said, "One well on 40-acre spacing will drain 1 bcf of reserves." But one well drilled on 20-acre spacing also will drain 1 bcf, including reserves that otherwise would not be recoverable, he said.
Such a revision of reserves could add $5-$10/share to the value of Barrett's stock and supports company executives in their rejection of Royal Dutch/Shell Group's bid of $55/share in its hostile takeover attempt, analysts said. Shell officials had no comment on that Wednesday.
The Colorado Oil and Gas Conservation Commission ruled this week that Barrett Resources can increase the density of its development drilling, with 20-acre spacing between wells on 16,000 acres of federal land in the Piceance basin. That makes a total of 29,000 acres in the Piceance Basin approved for 20-acre density development, representing 20% of Barrett's total acreage in that basin, officials said.
The company has increased its drilling program in that area to five rigs from three previously, and plans to have 10 rigs working in that area later this year. With other additions from current drilling programs, officials said the company's proved oil and gas reserves would increase by 53% from the start of this year to 2.1 tcf of natural gas equivalent by the end of April.
Those incremental proved reserves were reviewed by independent reservoir engineers and include 645 bcf of gas reserves in Colorado's Piceance basin, 54 bcf of gas reserves in the Powder River basin of Wyoming, and 37 bcfe of oil and gas reserves in the Uinta basin in Utah, officials said.