PetroQuest Energy Inc. said Monday it has closed on the sale of its assets in the Fayetteville Shale for about $9.2 million as it shifts its focus to production of natural gas liquids (NGL) from other plays, including the Woodford Shale and the Mississippian Lime formation.
Although PetroQuest, an exploration and production company based in Lafayette, LA, did not disclose the buyer or the amount of acreage sold, the company did say all of the acreage involved in the transaction was nonoperated and located in Arkansas.
PetroQuest’s last annual report showed the company held 23,378 gross (6,729 net) acres of developed leasehold and 6,629 gross (2,120 net) acres of undeveloped leasehold in Arkansas at the end of 2011.
CEO Charles Goodson said the sale would enable PetroQuest “to further strengthen our balance sheet while increasing our focus on growing our liquids production from our core assets in the Mississippian Lime, Woodford, East Texas and Gulf Coast Basin.”
The company estimated that its Fayetteville assets generated about $1.3 million in operating cash flow, based on average daily production of 5 MMcf/d. PetroQuest also estimated that proved reserves from its Fayetteville assets totaled about 11 Bcf on Sept. 30, with an estimated discounted net cash flow of $5.5 million, based on an oil price of $94.97/bbl and a natural gas price of $2.83/Mcf.
PetroQuest said the sale of its Fayetteville assets would not impact the current borrowing base of $130 million under the company’s credit facility.
In its operations update, the company said it had expanded takeaway capacity in its Gulf Coast area of operations — and increased daily gross production to approximately 82,000 MMcfe, with 21% weighted toward NGL — by installing downstream compression equipment in the La Cantera deep gas field in Vermillion Parish, LA.
PetroQuest said it expects additional capacity will be available during 2Q2013 and it plans to increase NGL production from two wells in the field: Thibodeaux No. 1 and Broussard Estates No. 2. The company said it expects to spud its third well at La Cantera, Broussard Estates No. 3, later this week, with first production in 2Q2013, depending on takeaway capacity. PetroQuest said it expects the three wells to produce at a gross daily rate of 120,000-130,000 MMcfe, with 25% weighted toward NGLs.
The company said it expects to receive 70 square miles of 3D seismic data later this month. The data will reportedly include an analysis of its Thunder Bayou prospect, located two miles north of the La Cantera field. PetroQuest said it plans to drill its first test well in Thunder Bayou during 2Q2013.
PetroQuest said two operated wells in the Mississippian Lime in northern Oklahoma have achieved maximum 24-hour gross daily production rates. PQML No. 9, located in Pawnee County, OK, recorded 1,291 boe (with 87% weighted toward oil), while PQML No. 8, located in Kay County, OK, reached 74 boe (100% oil). The company said three additional wells (PQML Nos. 6 and 10 in Kay County and PQML No. 11 in Pawnee County) have been completed and are in various stages of flowback. A 3D seismic study is also planned in Pawnee County during 2Q2013.
“We have a strong track record of utilizing seismic data in the Gulf Coast and the Woodford to significantly improve our drilling success,” Goodson said. “We believe that obtaining seismic data over our Mississippian acreage is the next logical step in our development plan, and we expect the data will be extremely beneficial in reducing the variability of well results.”
In the Woodford Shale, the company said it had recently started production from four wells in a liquids-rich portion of the play that recorded an average maximum 24-hour gross rate of 3,627 Mcf of natural gas 255 bbl of NGL. Another eight wells in the liquids-rich area are being completed.
PetroQuest estimated that its 4Q2012 production would average between 96 and 97 MMcfe/d.
According to NGI‘s Shale Daily Unconventional Rig Count, for the week ending Jan. 4 there was a 37% decline in the number of drilling rigs targeting the Fayetteville Shale from 2012, from 27 to 17 rigs.
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