In the latest EIA 914 gas numbers, Louisiana is showing a 576 MMcf/d increase in production, which is nothing to snub your nose at. This piqued our interest over here at BTU Analytics. The initial reaction may be to attribute this growth to the Haynesville. Over the past six months there has been a lot of chatter as several companies, including Chesapeake, are working on researching and implementing re-fracs in the area. Additionally, Chesapeake is actively talking about drilling new wells with longer laterals and higher IP rates. However, it is not the Haynesville that drove the majority of the July to August production jump. While the work being done in the Haynesville has stemmed declines and even led to 100 MMcf/d of growth in the 2H 2015, the big story in Louisiana is Memorial Resources Development and the development of northern Louisiana in the Terryville Field targeting the Cotton Valley Formation. In 3Q 2015 Memorial brought 22 new wells online with 30-day IP rates ranging from 19.8 MMcf/d to 36.6 MMcf/d and had an average well cost of $11.8 M per well.
Looking at these IP rates, it is not a stretch to attribute much of the 576 MMcf/d Louisiana production jump to Memorial. Memorial has been the most active operator in the Terryville field, neighboring the Haynesville, and has significantly increased drilling activity in June.
As the series of wells that were drilled earlier in the year were turned to sales, using Genscape data, we can see that Memorial is the largest driver behind the increase in Louisiana gas production between July and August. Genscape flow data on 3 meters that connect to Memorial’s acreage shows a 300 MMcf/d jump in flows between July and August. Memorial has stated that it expects to bring an additional 13 to 18 wells online during the fourth quarter. With these outstanding results to date, BTU Analytics expects production to continue to grow in this area and we will be watching to see how Memorial’s new wells affect Louisiana production moving forward.