Energy to write off deep Conasauga leasehold

Energen Corp., Birmingham, Ala., will write off $10 million in unproved capitalized leasehold associated with its deep Conasauga shale acreage in Alabama in the second quarter of 2010 as being uneconomic given the outlook for natural gas prices.

July 20, 2010

2 min read

By OGJ editors
HOUSTON, July 20 -- Energen Corp., Birmingham, Ala., will write off $10 million in unproved capitalized leasehold associated with its deep Conasauga shale acreage in Alabama in the second quarter of 2010 as being uneconomic given the outlook for natural gas prices.

The company made the call after analyzing flow rates from completions performed in 2010 in the Marchant 22-16-1 well in Bibb County, Ala. (see map, OGJ, Dec. 15, 2008, p. 31).

After three acid etchings and two carbon dioxide stimulations in five zones that span some 4,000 ft at 7,500-11,500 ft, Energen established flows of 300-400 Mcfd at 120-180 psi pressures.

It noted that the Conasauga shale in Alabama is a mushwad formation and very tight compositionally, with limited permeability and porosity. Chesapeake Energy Corp. originally drilled and completed the Marchant well in conjunction with Energen.

Later this month, Energen plans to complete a thick, uphole interval in the Marchant well. This nondeformed Conasauga interval at 3,000-4,000 ft has low structural dip rates and a higher shale content than the deeper intervals. The company will also complete the Westervelt 19-2-1 well in Tuscaloosa County, Ala., in the next few as it works to determine the economic viability of the Chattanooga shale.

Energen’s remaining capitalized, unproved leasehold associated with its Chattanooga shale and the shallow Conasauga shale is $14.4 million after-tax ($23.2 million pre-tax).