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Completion Delays, Low Gas Prices Have Comstock Eyeing Eagle Ford Shift

Due to the limited availability of high-pressure pumping services, Comstock Resources Inc. said it continues to experience significant delays in completing its Haynesville or Bossier shale wells in North Louisiana. As a result, along with the relatively low price of dry natural gas, Comstock said it might put more focus on its liquids-rich Eagle Ford drilling program next year.

The Frisco, TX-based company first disclosed the problem when it released its second quarter operating results. As of Sept. 30, Comstock said it had 26 Haynesville or Bossier shale wells drilled and waiting on completion. Going forward, the company said it has been successful in obtaining pressure pumping and other related services, which will allow it to frack 14 wells before the end of the year.

With six operated rigs drilling in the Haynesville and Bossier shales, Comstock said it expects to drill another 10 wells in the fourth quarter, giving the company an estimated 22 wells to carry over into 2011 for completion.

However, due to currently weak natural gas prices, the company announced that it plans to release one of the six rigs in November and is considering moving an additional rig to South Texas to be utilized in its Eagle Ford shale drilling program in 2011, where more liquids are located.

Earlier this month Michael Zenker, head of gas and power research at Barclays Capital, said it seems like producers are pushing more drilling capital expenditures into "oilier" shale gas assets, somewhat at the expense of the drier plays, due to relatively low gas prices compared to some of the liquids markets (see Shale Daily, Oct. 14).

While the "wet" plays require more infrastructure and processing equipment, which could lead to backlog delays, Zenker noted that the "value contents" still favor wet shale gas by far because of the current premium associated with the prices of crude oil and natural gas liquids in comparison with dry gas.

As for what it would take to return some of the former luster to nearly all-dry gas plays such as the Haynesville, Zenker said higher gas prices are the key..

Comstock also announced Tuesday that it has entered into an agreement with a major service provider to provide the company with a dedicated frack crew for its North Louisiana operations in early 2011. The dedicated crew will allow Comstock to complete its backlog of Haynesville and Bossier shale wells during 2011 as well as keep current with the company's 2011 anticipated drilling activity. In addition, Comstock is in the process of finalizing agreements for completion services for its 2010 and anticipated 2011 Eagle Ford shale drilling program.

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