| Masters Creek Field Updates
October 30, 2009. The Masters Creek Field is one of four fields that Swift Energy operates in its Central Louisiana/East Texas core area of operation. Obtained as part of our 1998 Toledo Bend acquisition, the field is located in Louisiana within the adjacent southern corners of Vernon Parish and Rapides Parish with a slight overlap into Allen Parish (see map). We have drilling and production rights in 40,080 net acres in this field, together with 31,200 fee mineral acres.
The Masters Creek Field produces from the Austin Chalk trend, which has natural vertical fractures that often contain oil and gas deposits. To tap as many deposits as possible, wells are drilled vertically down to the reservoir, which in Masters Creek is generally found at depths of 14,000 feet or greater, and then turned 90 degrees to drill horizontally through successive fractures. Frequently, opposing dual lateral legs are drilled in a single well.
Austin Chalk wells typically have high initial production rates that provide quick payout, followed by sharp early declines in production. From 1998 to 2001, we carried out a vigorous horizontal drilling program in Masters Creek and an associated Austin Chalk field (Brookeland Field, also part of the Toledo Bend acquisition), but because of drastic changes in the industry environment during 2001, we changed our drilling focus to fields having reserves that would give us stable, long-term production. As a result, we have drilled few wells in Masters Creek during the last eight years. One unsuccessful well was drilled in the field in 2008.
At year-end 2008, we had interests in 44 producing wells in Masters Creek, with 31 of the wells operated by us. The field provided 1.7%, or 162.6 MBoe, of Swift’s total 2008 production of 10.0 MMBoe. The production consisted of 42.0% oil, 23.9% natural gas liquids, and 34.1% natural gas. During 2008 we initiated a production enhancement program in the field to slow its production decline.
Our reserves in Masters Creek at year-end 2008 (6.0 MMBoe) represented 5.2% of the company’s year-end reserves. They consisted of 71.5% oil and natural gas liquids and were 65% undeveloped. The field had nine proved undeveloped locations (PUDs).
Following our purchase of Masters Creek in 1998, we observed that the production declines of the wells we drilled in this field were slower than was typical of most Austin Chalk wells and that they had longer and larger production profiles. This was attributed to reservoir characteristics of Masters Creek that differ from those found in many Austin Chalk fields. In particular, we found that Masters Creek wells are water driven, whereas most Austin Chalk fields are depletion driven. In the Texas Giddings Field, for example, where we had a highly successful horizontal drilling program from 1992 to 2000, the production is completely depletion driven.
The large volumes of water produced with the oil and gas in Masters Creek required that we develop an elaborate water disposal system that includes an array of salt water disposal wells and a network of pipelines that can divert the flow of the water to the disposal wells with little or no production shutdowns for the system’s maintenance. Also, we developed a procedure in which chemicals are pumped into the hole and flushed out into the formation with water to inhibit the buildup of scale along the interior walls of the well bore tubulars. This procedure was so successful that the frequency of the chemical injections and the associated costs were greatly reduced.
Since much of the Masters Creek Field is still undeveloped, we anticipate resuming a drilling program in this field at some time in the future.
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Updates (in reverse chronological order)
May 3, 2012: PRESS RELEASE. During first-quarter 2012 we completed the Exxon Corp. #10-1 well in our Masters Creek field in Vernon Parish and Rapides Parish of Louisiana. The well produced hydrocarbons at initial test rates of 836 barrels of oil per day and 5.4 MMcf of natural gas per day with a flowing tubing pressure of 2,565 psi on a 48/64-in. choke. This well was a proof-of-concept well drilled at an infill location to a lateral length of 2,500 feet, and its productivity has proven this concept. As a result, we will have the ability to down space on previously developed acreage units in this area. We are also evaluating additional acreage in the area and will most likely resume drilling in this area in 2013.
February 23, 2012: PRESS RELEASE. During the fourth quarter of 2011, one operated well was drilled to the Austin Chalk formation in the Masters Creek field. Upon completion, the Exxon Corp. #10-1 produced hydrocarbons at initial test rates of 836 barrels of oil per day and 5.4 MMcf of natural gas per day with flowing tubing pressure of 2,565 psi on a 48/64-in. choke. This well also produced significant volumes of water during this preliminary test and will not be completely cleaned up until it is connected to production facilities. Drilling operations were halted at approximately 2,500 feet, or approximately 50%, into the planned lateral length of 5,000 feet. This well will be placed on production once facility construction is completed later in the first quarter. Production will be monitored for an extended period of time to measure the reservoir properties of this well.
November 3, 2011: 2011 THIRD QUARTER 10-Q. In our Central Louisiana/East Texas core area, one well was spud in our Masters Creek field in September and is expected to be completed during the fourth quarter of 2011.
February 25, 2010: 2009 FORM 10-K. At year-end 2009, 7.3 MMBoe, or 6.5%, of the company’s total reserves were in the Masters Creek Field. For the year 2009, this field provided 1.4%, of the company’s production. Approximately 70.9% of the proved reserves of 7.3 MMBoe in the Masters Creek Field consisted of oil and NGLs, and 5.2 MMBoe, or 71%, of the reserves were undeveloped.
During 2009, we did not drill any wells in the Masters Creek Field. At year-end 2009 we had identified nine PUDs in the field and plan to drill one well in the field during 2010.
For additional information, please see the latest Form 10-K and Form 10-Q.
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