EUR Stats Creep Higher

By Eric Fox | February 23, 2011 AAA

The exploration and production industry continues to improve drilling efficiency when developing unconventional resource basins in North America. This is leading to an increase in the estimated ultimate recovery (EUR) from wells in these plays.

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EUR
The EUR is an estimate of the amount of hydrocarbons that can be economically recovered from a well or field during its lifetime. This figure is derived by the operator based on the initial production, production decline curve and other data associated with a well.

Petrohawk Energy (NYSE:HK) has acreage in South Texas that is prospective for the Eagle Ford Shale, and is focused on three separate projects areas in the play. In the Hawkville Field, the company recently tested a new hydraulic fracturing design on horizontal wells here and reported up to a 50% improvement in the EUR compared to the old design.

Petrohawk Energy also reported an improved EUR at the Black Hawk field due to improved well performance. The company said that the new EUR on an average well here is 1.8 Bcf of natural gas, 550,000 barrels of condensate and 220,000 barrels of natural gas liquids. The previous EUR used by Petrohawk Energy was 2.2 Bcf of natural gas and 375,000 barrels of condensate.

Comstock Resources (NYSE:CRK) is active in Haynesville Shale and added 402 Bcfe of proved reserves in this play in 2010. The company said during the fourth quarter of 2010 conference call that proved undeveloped (PUD) wells that it booked in the Haynesville Shale were recorded at an EUR that was 20% to 25% less than what it expected to eventually recover from these wells.

Comstock Resources uses an EUR of 6.3 Bcfe for its developed or producing wells in the Haynesville Shale, compared to only 5.3 Bcfe for the PUD's that offset these producing assets.

Pioneer Natural Resources (NYSE:PXD) is active in developing the Spraberry field in the Permian Basin, where the company has 549 million BOE of proved reserves at the end of 2010. The company recently raised its EUR on wells here from 110,000 to 140,000 BOE each, based on deepening the wells to the lower portion of the Wolfcamp on its properties.

Some of the improvement in EUR is due to longer laterals used on horizontal wells in some of these areas. EQT Corp (NYSE:EQT) is active in the Marcellus Shale in both West Virginia and Pennsylvania, and raised its EURs here because of this reason. The company is using an EUR of 6.3 Bcf for wells in Pennsylvania and 4.7 Bcf for wells in West Virginia in the proved undeveloped category.

The Bottom Line
One thing to consider is that the EUR is only an estimate by the company and is based on the available data on a well that, in most cases, will be producing for up to 30 years. Some question the reliability of these estimates given the time horizon involved. (Long-term energy outlooks suggest a fundamental energy shift to natural gas. To learn more, read Natural Gas Forecast.)

Operational efficiency is the key to the manufacturing model of onshore development of oil and gas resources, and the exploration and production industry continues to get better over time in this area. The industry is moving EURs higher based on this improvement.

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