Got Haynesville and/or Bossier shale?, ask the analysts at Tudor, Pickering, Holt & Co. Securities Inc. " You need some... it’s very valuable." Seems nobody making well reports are quite sure about whether the Haynesville shale and the Bossier shale in northern Louisiana and East Texas are one and the same or different-just-stacked. Geologically speaking, they are separate formations married at the hip, but the Bossier may extend further west than does the possibly prolific Haynesville. Seems everybody's quite sure that both are worth tapping. Thus the coinage "Bossierville," first put in print by the TPH team but who give credit to Core Labs at a technical presentation. TPH had more to say on the shale and the companies involved in it. Following are excerpts from their report: "This is the real deal. We’ve touched base with every public and private player we know and truly believe this play is indeed the next big thing. Recent weeks have shown Haynesville mania in full force. Some believe results from one well by PVA literally creating billions of equity value, but we believe the crescendo of impending well news makes the Haynesville the best place to invest for potential upside, near-term news, and step change value creation. "This is similar to what happened around the Barnett when EOG really highlighted that play back in 2004 and KWK, CRZO, etc…became fast followers. Best Haynesville/Bossier levered names: GDP, HK, XCO and GMXR. For catalyst-hungry investors, we strongly believe that HK and CHK will both have results out in next ~3-4 months and real upside remains for Haynesville-levered names. The Haynesville shale is located between the deeper Haynesville lime/conglomerate and the shallower Bossier shale. The Haynesville distinguishing characteristics are higher porosity, total organic content and deeper depth. This combination leads to higher gas in place and we believe likely leads to higher “free gas” (vs. adsorbed gas) in the shale. Higher pressure and free gas may be leading to the higher initial flow rates, higher sustained flow rates, and shallower long-term declines. All these factors lead to our confidence in increasing our typical well profiles. Typical well profiles: At this point [the report was published in mid-June], PVA is the only disclosed initial production (IP) rate of 8 mmcf/day (10-15 mmcf/d expected). However, our industry moles have repeatedly confirmed rumors of IPs of 10-20+ mmcf/d suggesting EURs of 4-10 bcfe. Previously, we were modeling EURs of 4 bcfe (gross), $7MM well costs, 80-acre spacing and assumed 1/3 of acreage was productive. We now know those numbers are too conservative and as such are increasing our type curves. Our new Bossierville type curve is a 6 bcfe gross EUR; 80-acre spacing; 50% of acreage works for $7MM well costs. This methodology is consistent across every single company mentioned below. Over time there will be haves and have-less (probably some have-nots), but we honestly don’t know how to differentiate the companies... yet. How to play? Lots of companies with acreage have not yet talked about the full extent of their Haynesville acreage, because it is simply too early to know the best drilling/completion recipe. Also adding acreage alone doesn’t create value, companies need to significantly accelerate rig count to create real asset value (watch the dayrates on 1500 hp rigs, big moves coming). The most levered names to the play include GDP, HK and GMXR with 50+% of their NAVs associated with Haynesville. XCO has the “cheapest” multiples in the play and CHK owns the most acreage with 500k acres. Companies: We previously assigned Haynesville value to CHK, HK, XCO, GDP, GMXR, STR. We are now rolling in value for APC, XTO, DVN and EP. For all companies, we are now assuming the 6 Bcfe typical well. A summary of our assumptions and valuation for each company follows: GDP – We are increasing our NAV 56% to $80 for the company’s 66k net Haynesville acres. In our modeling, Haynesville has ~415 locations developed over the next 13 years. The total value of Haynesville to GDP is $45/share or 57% of the overall NAV. This makes GDP the most levered of our coverage list to the Haynesville. GMXR – Tied with HK for second most levered name; Bossierville accounting for 50% of NAV. NAV moves +$31 to $84. HK – Second most levered name to Bossierville, accounting for 50% of HK’s NAV. HK has talked publicly of 155k net acres in the play with goal of 300k net acres. At this point, we believe their hard working landmen have taken them to ~200k net acres and we assume 50% of that acreage works. Our NAV moves +$23 to $61. Getting another 100k acres (per their plan) only moves value a couple bucks…d oubling rig count and accelerating the pace of development adds $20/share. XCO – We are increasing our NAV 37% to $41 as our increased type curve adds $11/share. Haynesville valuation for XCO assumes 125k net acres (101k net announced), 50% of their acreage productive on 80-acre spacing, for ~780 locations developed over the next 12 years. Haynesville represents 34% of XCO’s overall NAV. CHK – We are increasing our NAV 16% to $101. CHK has been the leader in the Haynesville and has quickly amassed 500k net acres. Haynesville now accounts for 20% of CHK’s NAV. As the Great American Land grab is nearly over (CHK at 500k goal), we believe CHK will begin announcing well results potentially as early as their Q2 call. However, we believe meaningful well news/type curves will almost certainly be revealed at their first ever analyst day this fall. EP – We are increasing our NAV $1.50/sh, or 8% to $27 as we roll in previously unassigned Haynesville value at our 6 bcfe typical well. Our Haynesville valuation for EP assumes 27k net acres, 50% of their acreage productive on 80-acre spacing, for 170 locations developed over the next 8 years. STR – Yesterday we increased our NAV by $5.50/sh (to $79) for STR’s 30k acres of Haynesville potential. Gut feel says risking their acreage by 50% too punitive as conservative company probably already heavily risking. XTO – Following yesterday’s announcement, we are rolling in new value for the company’s 100K net Haynesville acres. The Haynesville exposure increases the XTO NAV by $6/sh to $102 and represents 6% of XTO’s overall NAV. APC – We are increasing our NAV $7/sh to $104 as we roll in 100k net acres, 50% productive on 80-acre spacing, for 625 locations developed over the next 9 years. DVN – DVN not talking about it yet, but without a doubt they are testing. At this point, we are rolling in credit for their 137K net Carthage acreage (why wouldn’t Carthage have potential in the middle of the play?). We have not giving credit for 190K net acres in East Texas that may be prime for “Bossierville” exposure. Our NAV moves up $7 to $152, which could prove conservative as more acreage could be productive. Steve Toon, Editor, A&D Watch; Contributing Editor, Oil and Gas Investor; www.OilandGasInvestor.com; stoon@hartenergy.com