Forest Oil is shifting gears in the Eagle Ford, after three gross (1.5 net) wells hit a fault line in the company's southern acreage during the fourth-quarter.
In 2013, Forest reported results on 44 gross (22 net) wells, with a 30-day average gross production rate of 408 boe/d. By contrast, 17 gross (8.5 net) wells drilled during the fourth-quarter had a 30-day average gross production of 304 boe/d. That's about ~25% less for the fourth-quarter, compared to the full year. Both gross production rates included the results from three gross (1.5 net) wells impacted by faulting.
The company had plans for 2014 to more than double its oil production in the Eagle Ford; however, due to faulting's negative impact on production in the fourth-quarter, the company is pulling back the reins.
77% of the company's $290-310 million capital budget was slated for the Eagle Ford, but new estimates have been set at 36%. Forest is re-allocating its budget to liquids-rich opportunities in the Ark-La-Tex, where it has a high degree of confidence in the geology.
Read more: Forest Oil Will Double Oil Production in 2014 - Securing Eagle Ford Acreage
“We are electing to defer Eagle Ford drilling activity as we complete the reprocessing and interpretation of 3D seismic data and also evaluate the success of recent well completion designs. Importantly, we maintain a balanced portfolio of projects that provides attractive risk-adjusted rate-of-return opportunities. This will enable us to reallocate capital to our liquids-rich opportunities in the Ark-La-Tex to maintain a consistent level of drilling activity in 2014. This decision will result in lower oil growth for 2014; however, we believe this is a prudent capital allocation decision”
Forest Oil Eagle Ford Outlook 2014
While seismic is being reprocessed and optimal well design is being evaluated, Forest will reduce the pace of drilling in the Eagle Ford. The company plans to drill 48 gross (24 net) wells, and expects that the net capital allocated to the Eagle Ford for drilling and completion activities in 2014 will total $95 million.
Forest Oil Eagle Ford Highlights
- Faulting in southern Eagle Ford acreage impacts Forest Oil's allocation of 2014 capital budget and production plans
- Eagle Ford capital budget slashed from ~$220 million to $95 million in 2014
- 48 gross (24 net) wells to be drilled in the Eagle Ford in 2014
- Forest shifting focus in 2014 from Eagle Ford to Ark-La-Tex
- 25% less 30-day average gross production in Q4 compared to full year 2013
- Net sales volumes in Q4 2013 of 2,950 boe/d
Read more at ForestOil.com