(Editor’s note: This article was written on Dec. 12 and published in Oil and Gas Investor magazine on Jan. 1)
Upcoming tests of the Midland Basin’s deep Barnett
BKV CEO Chris Kalnin, 96.1% owner,
Part of the story BKV is pitching to potential investors is a buy-and-make-it-better narrative along with power generation and potential LNG sourcing.
Having some operations already in Appalachia, Denver-based BKV entered the Barnett in October of 2020 with a $570
The 289,000 net acres included legacy leasehold Devon had gained from buying Mitchell Energy & Development Corp., the pre-horizontal play’s founder, in January 2002.
It also came with 3,850 operated, producing wells.
While natgas prices were still in a COVID-related demand slump in 2020, Kalnin and the team got to work on a different tack: increasing Barnett production and EURs from existing wells rather than drilling new wells.
Through September-end this past year, Barnett refrac
The average finding and development cost for the additional reserves is 70 cents/MMcfe.
BKV estimates it has 294 additional horizontal Barnett refrac candidates, including within its newly acquired Exxon Mobil Corp. leasehold.
BKV bought the major’s Barnett upstream and midstream exit
The BKV buy this past summer came with some 175,000 net acres and 2,100 operated wells as well as 778 miles of gathering, compression and processing infrastructure.
It now holds some 468,000 net Barnett acres, 99% HBP, 96.1% working interest and 80.4% net revenue interest. Wells total 6,975 gross; 5,702 net.
Its Barnett proved reserves total 5.4 Tcfe (75% gas). Average five-year PDP annual decline is 7.3%; 10-year, 6.5%.
“More than a decade of technological advancements since the discovery of the Barnett, combined with significant remaining gas and NGL resources in place, have created a highly capital efficient opportunity to restimulate legacy wellbores to meaningfully increase production and enhance recovery factors and reserves,” BKV reported.
Shale-gas producers went to school on the Barnett play in the aughts, taking the concept to gassy, tight rock in the Fayetteville, Marcellus and Haynesville
In the past decade, Fort Worth Basin operations have consolidated around about a dozen producers. BKV is at the top, averaging 731 MMcfe/d net (869 MMcfe/d gross). The No. 2 Barnett producer, TotalEnergies, is producing an average 443 MMcfe/d gross.
Others are Bedrock Energy Partners (172 MMcfe/d), Javelin Energy Partners, Diversified Energy Co., United Production Partners (each with between 162 MMcfe/d and 146 MMcfe/d), EOG Resources Inc. (132 MMcfe/d), Eagle Ridge Energy (129 MMcfe/d), Sage Natural Resources (108 MMcfe/d) and ConocoPhillips
The 10 producers’ combined 2,356 MMcfe/d is roughly 94% of total Barnett production of some 2.5 Bcf/d.
The play’s gross output peaked in the past decade at 5 Bcf/d, according to Rob Clarke, Wood
“Cumulative production from the Barnett is roughly 26 Tcfe,” he told
Entering the Barnett in 2020, BKV didn’t pick up a rig for the property until this past year, landing nine new wells and completing four by September-end.
Barnett-wide, the rig count was roughly five at year-end 2019; this past fall, it was 12, according to Enverus data.
BKV’s view of gas markets? There’s U.S. power-gen, which is fueled 38% by natgas these days, up from 12% in 1990.
And there’s LNG export. U.S. LNG plants are running at 91% capacity, another 4 Bcf/d is in construction and the U.S. has permitted another 27 Bcf/d. The
Some 90% of existing LNG capacity is on the Gulf Coast and, BKV noted, the Barnett is just 300 miles away.
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