Niobrara (N. Colorado & S. Wyoming)
Posted: Fri Mar 11, 2011 2:09 pm
Carrizo Oil & Gas (CRZO) is a gasser (Barnett Shale) but I added it to the Sweet 16 on December 20 after a visit with the company. I'm bullish on what they have going in the Eagle Ford and see even more portential in the Niobrara. They also have a nice position in the Marcellus Shale that will really ramp up production in 2012 (from 7 MMcfepd to an estimated 45 MMcfepd).
EOG and CLR also give us exposure to the Niobrara.
Carrizo Oil and Gas (CRZO) has 61,000 net acres in the Niobrara. They expect this area to add substantial oil and condensate in the near term. In the fourth quarter of last year it drilled three and frac'd one. A 1 rig plan is in place for 2011. Of this Niobrara acreage 50% is drillable. Carrizo plans on 320 acre spacing which would equate to 95 wells. EUR per well is estimated at 300 MBOE. Carrizo is still looking to add to its position. Nobel (NBL) did estimate that its Niobrara wells could have up to 500 Mboe per well using horizontal drilling. EOG's IPs have been between 500 to 1500 Boepd. Carrizo's first well here had an IP of 590 Bopd on a 2050 foot horizontal. They have two other wells drilled and waiting on frac. To optimize they are estimated having well costs on average of $3.5 million. Carrizo plans to do 5,000 foot laterals with 15 frac stages. When correlating price to an average well, it is surprising the difference from $75 per barrel to $90 per barrel. Using $75 the IRR is 80%, but if $90 is used that number becomes 150%. Using $70 undiscounted payback is 1.4 years.
EOG and CLR also give us exposure to the Niobrara.
Carrizo Oil and Gas (CRZO) has 61,000 net acres in the Niobrara. They expect this area to add substantial oil and condensate in the near term. In the fourth quarter of last year it drilled three and frac'd one. A 1 rig plan is in place for 2011. Of this Niobrara acreage 50% is drillable. Carrizo plans on 320 acre spacing which would equate to 95 wells. EUR per well is estimated at 300 MBOE. Carrizo is still looking to add to its position. Nobel (NBL) did estimate that its Niobrara wells could have up to 500 Mboe per well using horizontal drilling. EOG's IPs have been between 500 to 1500 Boepd. Carrizo's first well here had an IP of 590 Bopd on a 2050 foot horizontal. They have two other wells drilled and waiting on frac. To optimize they are estimated having well costs on average of $3.5 million. Carrizo plans to do 5,000 foot laterals with 15 frac stages. When correlating price to an average well, it is surprising the difference from $75 per barrel to $90 per barrel. Using $75 the IRR is 80%, but if $90 is used that number becomes 150%. Using $70 undiscounted payback is 1.4 years.