EXCO Resources Inc., Dallas, plans to run 22 operated rigs throughout 2011 in East Texas and North Louisiana exploiting the Haynesville shale on part of its 76,000 net acre holding.
However, current contracts allow the company to shed half those rigs by August if product pricing does not meet its economic hurdles.
Of the $782 million capital budget, $683 million will go to drill and complete 233 gross (65.2 net) horizontal shale wells, 163 operated and 70 nonoperated. The company drilled and completed 92 gross operated wells in 2010 with 100% success.
Development is concentrated in DeSoto Parish, La., and the recently acquired Shelby Trough area in East Texas. DeSoto development is on 80-acre spacing in a manufacturing mode that utilizes multipad development. In the Shelby Trough the company is delineating its position, establishing units, and holding acreage. It will develop some units in 2011 and expects to transition to full manufacturing mode in 2012.
In mid-2010 EXCO initiated manufacturing in DeSoto, completing in June its first four-well, 80-acre spacing test across 320 acres and in October its first eight-well, 80-acre spacing test across a full 640-acre unit. The company's manufacturing process typically involves four rigs/sq mile followed by two to three fracture stimulation fleets to simultaneously complete.
At the end of 2010 EXCO had 12 units in progress for full 80-acre development, and it plans to target a further 15 units in 2011.
In late 2010 the company commissioned a 12-mile, 24-in. water distribution line that uses waste water from a local paper mill to support the frac fleets. It recently used the line to simultaneously feed three frac fleets to complete seven wells in the same section.
On the 24,000 net acres acquired in 2010 in Shelby, San Augustine, and Nacogdoches counties, Tex., EXCO had six rigs running by yearend and 19 horizontal wells flowing to sales at a combined 100 MMcfd, or 34 MMcfd net, compared with 34 MMcfd and 7 MMcfd at acquisition.
Some recent Shelby wells yielded results comparable to the DeSoto area. Two wells had initial rates of 23 and 28 MMcfd with 8,979 psi and 9,520 psi flowing pressures, respectively. By the end of 2011, all core San Augustine and Nacogdoches acreage is expected to be held by production.
EXCO shot 168 sq miles of 3D seismic in DeSoto and 126 sq miles in Shelby. The company monitored five wells with microseismic and 19 wells with its buried array monitoring system in 2010. In its completion evaluation process, EXCO gathered production logs on 10 horizontal wells and conducted tracer evaluations on 17 horizontal wells. It also drilled a dedicated vertical pressure monitoring well and installed permanent downhole gauges to measure and monitor the reservoir pressure in the Haynesville shale.
Meanwhile, two horizontal wells in DeSoto had initial flow rates of 11 and 13 MMcfd in 2010 from the Bossier shale, which overlies the Haynesville on most of EXCO's acreage. The company will monitor performance of the two wells before further testing. It will complete the first Bossier well at Shelby in late January 2011.
EXCO produced 104 MMcfe/d in the last quarter of 2010 from the Cotton Valley and other nonshale formations. Vernon field in Jackson Parish, La., is the largest Cotton Valley field in the company, representing 20% of EXCO's net production.
The company is not drilling in these formations because of low commodity prices, but it plans 25 recompletions in DeSoto in 2011 targeting mainly the upper Cotton Valley and Hosston intervals. It typically runs six service rigs replacing tubing, changing pumps, cleaning out fill, and implementing general repairs.
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