Comstock Resources Inc. (NYSE: CRK) said Oct. 11 it expanded its Haynesville Shale joint venture (JV) with USG Properties Haynesville LLC, a subsidiary of NextEra Energy Inc.
In January 2017, Comstock formed the JV with USG to jointly develop Haynesville acreage in Louisiana and Texas outside of the Frisco, Texas-based company's core. The initial activities of the JV program entered in early 2017 have been focused primarily in Caddo Parish, La., where to date USG had acquired 6,821 net acres targeting the Haynesville.
USG will now also participate in four wells being drilled targeting the Bossier Formation in Sabine Parish, La. Comstock's Bossier Shale well drilled in 2015 exceeded the production goal established for these four wells, according to company's press release.
The participation by USG allowed Comstock to increase its activity level resulting in the royalty relief, additional acreage and working interest. These wells will also allow the company to prove up its substantial inventory of Bossier Shale projects.
USG will pay Comstock for the right to participate for 50% of the company's working interest in each of the four wells. The financial arrangements provide for an additional performance payment to Comstock for each well that meets or exceeds the company's production target.
As a result, Comstock has earned a lease on an additional 640 acres adjacent to its Toledo Bend Field, was granted a reduction in the royalty on these wells from 25% to 18.75% and was assigned an additional 12.5% working interest in the wells.
Additionally, USG recently agreed to participate in a drilling program on certain of Comstock's acreage in Harrison County, Texas that will target the Haynesville Shale. The terms of the agreement are similar to the Sabine Parrish arrangements.
Comstock currently has about 4,000 net acres and 34 Haynesville locations in its Waskom Field in Harrison and is pursuing additional add-on acreage to allow the drilling of extended lateral wells, the release said. The participation of USG will allow Comstock to acquire additional acreage to complement its existing acreage, which will also add additional drilling locations to the company's inventory.
So far in 2017, Comstock and USG have drilled 34 extended-lateral wells targeting the Haynesville primarily in Caddo Parish, three of which with 10,000-ft laterals. The companies are also currently drilling a fourth well with a 10,000-ft lateral. Completion operations on these wells will commence in November, the release said.