American Energy Production Inc(fka AENP)

[justfrank]

or how about this one? Lot's of company breathing that air.

Posted on Sun, Jan. 01, 2006
Barnett Shale a hot property
By DAN PILLER
STAR-TELEGRAM STAFF WRITER

Everything about the Barnett Shale natural-gas field got bigger last year -- and its reputation spread from North Texas across the country.

Production was up 19 percent through the first 10 months of 2005, putting the field on track to increase its production to almost 435 million cubic feet in 2005. The prices producers received doubled during the year, from the $6-$7 per thousand cubic feet to a record $15 per thousand cubic feet as cold weather arrived in December.

In early 2005, 50-60 drilling rigs were working in the field that adjoins Fort Worth. By year's end, 125 rigs were working with the biggest concentrations now in Johnson, Tarrant and Parker counties.

Producers began using drilling rigs with up to 3,000 horsepower, double the normal power, to cut into the hard rock 8,000 feet below North Texas. Chief Oil & Gas successfully drilled a mile down and then a mile horizontally on Ross Perot Jr.'s Alliance Airport property north of Fort Worth. Several producers reported getting initial production of 5 million cubic feet or more per day from Barnett Shale wells in Johnson County. Chairman Mark Papa of EOG Resources of Houston bragged of a "monster" 7.7 million cubic feet well near Mansfield that was drilled in September.

Numbers like that, [b[four or five times the average initial production from conventional wells, were bound to attract big fish. During 2005, Shell Energy, Marathon Oil and ConocoPhillips leased, partnered or merged their way into the nation's hottest natural-gas play. Finally the biggest of all, Exxon Mobil Corp., entered into a partnership with Dallas-based Harding Co.

It also has cities and airports looking for new revenue sources. Fort Worth Spinks Airport recently signed a lucrative lease on its 822 acres for natural-gas drilling that includes a one-time $3 million bonus and about $1.7 million annually for the airport in royalties.

Dallas/Fort Worth Airport is exploring a partnership with a drilling company to gain new revenues. In Fort Worth, drillers have signed deals to explore on undeveloped land. The city has more than 90 wells drilled.

All of that has caused worries about safety, especially after a well in Palo Pinto County exploded last month, gouging a huge crater that burned for days.

The Barnett Shale also received national press: Paul Harvey mentioned it on his syndicated radio show, and The Wall Street Journal wrote of it on the paper's front page, describing the field as "hot."

The expanded play was made possible by improvements in technology that made cracking the heretofore impermeable shale possible and the higher natural-gas prices, which made the more expensive Barnett wells economical.

The cloud on the horizon was the shortage of equipment and rising day rates. Producers who didn't have rigs were reporting increased delays in getting rigs and crews, and when they arrived, the price had doubled to $15,000 per day and up. Those higher prices doubtlessly will cut into the profit margins of producers this year, especially if natural-gas prices settle back into a more normal $7-$8 per thousand cubic feet range as expected.
Dan Piller, [phone] [e-mail]