Outstanding Shares: 45,347,280(as of March 2009)
Corporate Office: Houston, Tx.
Industry: Natural Gas and Oil Drilling Production
Southern Star Energy has a 40% operating interest in over 5,000 leased acres in northern Bossier Parish in Louisiana. The company has mainly focused on drilling wells in the Cotton Valley Formation (such as the Rendall 7-2, Atkins-Lincoln 18-2, Atkins Lincoln 18-1). Recently, the company drilled a Haynesville Shale test well on the Atkins-Lincoln 17-2 well. The well core results were very encouraging and indicate that this part of Bossier Parish may indeed have substantial amounts of the Haynesville Shale, a formation which usually has much higher flow rates than Cotton Valley wells. Several Haynesville Shale wells drilled by Petrohawk in southern Bossier Parish have had initial flow rates of over 15 MMcfe/day. Major energy companies in the Haynesville Shale play have estimated that the "core area" of the shale holds at least 40 Bcfe/section of recoverable natural gas. The picture below is a map from Chesapeake Energy that shows their latest estimates of the Haynesville Shale boundaries (shown as "organic shale deposition.")
Most of Southern Star's acreage was leased in 2005 & 2006, years before the Haynesville Shale boom, for several hundred dollars per acre. By June 2008, leases had gone up to $25,000 per acre in some areas as giant players like Chesapeake and Petrohawk fought to secure acreage. The company should be able to drill enough wells to hold almost all of the acreage by production when leases expire in the next few years. Most people didn't think that the Haynesville Shale extended much into northern Bossier Parish, but recently well results show that it may indeed go this far. If this is true, then Southern Star may be drastically undervalued.