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Horn River Basin To Reach Center Stage In 2010
Posted: Jan 12, 2010 09:54 AM by Eric Fox
The Horn River Basin in 2010 should quickly move through its appraisal and testing stage to early development, as several exploration and production companies ramp up drilling here.
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Getting On the Horn
The Horn River Basin is a relatively new shale play located in British Columbia in Canada. The industry is targeting this shale play for rapid development over the next few years, with production and development over the next four years as follows:
| 2010 |
- 116 wells |
- 7 Bcf of production |
| 2011 |
- 174 wells |
- 43 Bcf |
| 2012 |
- 236 wells |
- 108 Bcf |
| 2013 |
- 302 wells |
- 198 Bcf |
Quicksilver Resources (NYSE:KWK) has 130,000 net acres in the Horn River Basin, and has spent the last year building infrastructure, including roads and pipelines to set its acreage up for further development.
The company drilled two test wells in 2009, with one having an initial production rate of 13 million cubic feet equivalent per day. A second well is undergoing completion, and two wells are planned in 2010.
Who's Next?
Another company planning a major ramp in activity over the course of 2010-2011 is Nexen Inc. (NYSE:NXY), which has 126,000 net acres under lease in two different areas.
If Nexen adheres to its capital plan in 2010, the company expects to increase production here from 15 million cubic feet per day of natural gas currently, to 150-200 million cubic feet per day by September 2011.
Apache Corp (NYSE:APA) has 220,000 acres under net lease in the Horn River Basin. The company drilled four wells in 2009, and is in an alliance with EnCana (NYSE:ECA) and is drilling from several different pads. If everything goes according to plan in 2010, the two companies will have 52 wells completed and producing by the end of 2010.
Exxon Mobil
One big question mark in 2010 is the activity planned by Exxon Mobil (NYSE:XOM). The company disclosed a large position and some excellent well completions in the Horn River Basin in mid 2009, and indicated that it would start to develop this play. However, the purchase of XTO Energy (NYSE:XTO) gives Exxon Mobil thousands of shale well locations to drill in the lower 48 states, and might shift the Horn River Basin to a less important status within the company.
The Bottom Line
Shale gas is a game changer in the energy world, and this Canadian shale is as good as any in the lower 48 states. Investors should expect to hear more about the Horn River Basin in 2010. (For a primer on the oil and gas industry, refer to our Oil and Gas Industry Primer.)
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By Eric Fox
Eric J. Fox, is the founder of Brittain Capital Management, LLC., which manages the Alesia Fund, LP., a Value oriented long/short investment partnership. You can read more of his views on investments at his blog - Stock Market Prognosticator.
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