Callon Petroleum Co., Natchez, Miss., (NYSE: CPE) reports a strategy shift to diversify its asset base to onshore in order to increase visible growth potential, including establishing a presence in the North Louisiana Haynesville play.
Callon has recently acquired a 70% operating interest in a 577-acre Haynesville shale unit in Bossier Parish, Louisiana, at a cost of $3 million. The unit is in the core of the play offset by wells having demonstrated initial production rates of approximately 20 million cubic feet of natural gas per day. In 2010, Callon plans to drill and complete two horizontal wells. The first well is planned to spud by mid-year. The unit will be developed with up to seven horizontal wells. The company estimates the gross ultimate gas recovery to be 6.4 billion cubic feet of gas per well at an estimated cost of $9 million to drill and complete.
In the Permian Basin, the company’s primary target in the Permian Basin is the Wolfberry trend, which is a proven, low-permeability oil play. There are 22 producing wells and 148 drilling locations based on a 40-acre spacing development. Callon plans to commence drilling in February and drill up to 16 Wolfberry wells in 2010 and add additional rigs in 2011 and 2012. The estimated gross ultimate recovery is between 80,000 and 100,000 barrels of oil per well at an estimated cost to drill and complete of $1.5 million. The company believes additional upside exists from the potential to reduce drilling spacing to 20 acres, providing an additional 160 drilling locations. Callon has controlling interest and will operate.
Callon chairman and chief executive Fred Callon says, “We’ve been working on this strategy shift over the past 18 months, developing the plan, working to find the right assets and building the right team to set the foundation for our plan to diversify our asset base. The cash flow generated from our two deepwater fields with quality, long-lived reserves will be reinvested into onshore conventional oil and shale gas properties.”
He adds adds, “Even though it is early in 2010, we have already made significant progress towards improving our liquidity position, securing the financial resources needed to fund our growth plan and to create visible growth potential for our shareholders,” he concludes.
Callon Petroleum has oil and gas properties primarily offshore the Gulf of Mexico.
Recommended Reading
Deep Well Services, CNX Launch JV AutoSep Technologies
2024-04-25 - AutoSep Technologies, a joint venture between Deep Well Services and CNX Resources, will provide automated conventional flowback operations to the oil and gas industry.
EQT Sees Clear Path to $5B in Potential Divestments
2024-04-24 - EQT Corp. executives said that an April deal with Equinor has been a catalyst for talks with potential buyers as the company looks to shed debt for its Equitrans Midstream acquisition.
Matador Hoards Dry Powder for Potential M&A, Adds Delaware Acreage
2024-04-24 - Delaware-focused E&P Matador Resources is growing oil production, expanding midstream capacity, keeping debt low and hunting for M&A opportunities.
TotalEnergies, Vanguard Renewables Form RNG JV in US
2024-04-24 - Total Energies and Vanguard Renewable’s equally owned joint venture initially aims to advance 10 RNG projects into construction during the next 12 months.
Ithaca Energy to Buy Eni's UK Assets in $938MM North Sea Deal
2024-04-23 - Eni, one of Italy's biggest energy companies, will transfer its U.K. business in exchange for 38.5% of Ithaca's share capital, while the existing Ithaca Energy shareholders will own the remaining 61.5% of the combined group.