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Mitchell's Proved Reserves up 45%; NGL Up 18%

Mitchell's Proved Reserves up 45%; NGL Up 18%

For Mitchell Energy & Development Corp., the news, it seems, just gets better and better. The Houston-based independent, which less than a year ago had seriously considered selling its assets, reported last week that it has raised its year-end estimates of proved natural gas reserves by 45% to 1,467 Bcf, and proved natural gas liquids by 18% to 210 MM barrels.

Basing its success on aggressive field exploitation programs, total estimated proved reserves now stand at all time record levels. Most of the reserve additions resulted mostly from "better-than-expected" results in the company's largest field, the Newark East Barnett shale in North Texas.

Step-out drilling, using light sand fracture completion technology, extended the limits of the original "core" Barnett development area, said the company, and the success, which is completed with improved reserve recovery from recompletion and refracturing programs, pushed up the company's assessment for Barnett's ultimate potential.

The independent oil and gas company has used hydraulic fracturing to improve production in tight sand and aging wells for almost 20 years. Now the company has turned to light sand fracturing, or "waterfracs," which uses large volumes of water and about 100,000 pounds of sand. It reduces total well costs by about 20%, expanding the field limits and reducing development costs.

"We now have some 650 proved undeveloped locations in the Barnett," said CEO George P. Mitchell. "Drilling 140 of these annually will enable us to increase total company gas production by more than 15% this year and next."

Equally important, he said, is that the company has identified another 1,400 "probable" or "possible" Barnett locations on the present well spacing. Mitchell called the undrilled reserve base "extraordinarily large" and said it would give the company a "low-risk volume growth profile for years to come."

But that's not all. Mitchell said there is the potential to add another 2,000 locations by infill drilling the existing well spacing at the Newark East field, located about 40 miles north of Fort Worth. Three pilot programs are under way to test the closer spacing viability, and he said the early results were encouraging. However, decisions on possible infill development won't be made before 2001.

Another program, which would expand the Bridgeport gas processing plant by 50%, remains on target for completion by early December. That additional capacity will be used to process Barnett's growing production. The Bridgeport inlet capacity will be increased by 100 MMcf/d, adding 8,000 bbl/d to the plant's natural gas liquids extraction capabilities.

Carolyn Davis, Houston

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