Southwestern to invest $1.25 in Arkansas drilling ops

Southwestern Energy, the largest leaseholder in the Fayetteville Shale play, says it will invest $1.25 billion in the region next year, a decline from the previous year’s investment of $1.32 billion.

In part, infrastructure investments in Arkansas are maturing and Southwestern Energy officials have gained efficiencies in their drilling and exploration programs. BHP Billiton, which acquired the Fayetteville Shale assets of Chesapeake Energy and Petrohawk, said earlier this year it expected to invest $1 billion in Arkansas in 2012 as it more than doubles drilling production to 20 rigs.

“Our 2012 capital investments in the Fayetteville Shale will be slightly lower when compared to 2011, while our capital program in the Marcellus Shale in Pennsylvania will almost double and our New Ventures investments will increase due to additional exploratory drilling activities,” said Southwestern Energy CEO Steve Mueller.

One of Southwestern’s “New Ventures” involves drilling for oil in south Arkansas’ Smackover Brown Dense Formation. Using similar 3-D mapping and fracking technologies used in gas drilling, Southwestern is applying the techniques to older oil fields in Columbia County near Magnolia. The potential for natural gas drilling also exists.

“We plan to be drilling in at least three of our New Ventures ideas during the year including the Brown Dense play in Arkansas and Louisiana, New Brunswick, Canada and a new oil play in 2012,” Mueller said.

The company plans to spend $240 million on its “New Ventures” efforts in 2012, but it did not provide a breakout of that spending for the Smackover Brown Dense play.
The El Dorado-Smackover-Magnolia region was a hotbed of oil production in the 1920’s.

Deltic Timber CEO Ray Dillon, whose company stands to lease significant acreage to Southwestern if the Smackover proves positive, told Talk Business this week that he’s excited about the prospects in the region.

“We think it’s going to be a boon for south Arkansas. Quite frankly, it’s going to be a boon for the royalty owners in that region,” said Dillon, who revealed his company is leasing land in anticipation of the yet-to-be released results of test drilling.