Southwestern Energy third quarter earnings show continued interest in Northwest Colorado
October 24, 2014
Southwestern Energy had its third quarter earnings teleconference Friday morning, where top executive briefly highlighted oil and gas play in Northwest Colorado.
The company closed on a deal in May 2014 to purchase approximately 306,000 net acres in Northwest Colorado from Quicksilver Resources, Inc., a subsidiary of Royal Dutch Shell, for about $180 million.
Additionally, in July, the company purchased approximately 74,000 net acres for roughly $31 million.
These purchases allow the company to explore crude oil, natural gas liquids and natural gas in the Niobrara Formation in Moffat and Routt counties.
Since purchasing the land in March, Southwestern has drilled three vertical wells in Northwest Colorado and are beginning to drill their first horizontal well.
The company is planning to drill another vertical well in the first quarter of 2015.
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"It will take drilling of eight to ten wells to determine the economic viability of this play," Mueller said. "We are encouraged so far."
Mueller also said the company's speed in growth on the Niobrara will depend completely on the discovery.
"The economics won't be known on that until this time next year," Mueller said.
The company, although experiencing a drop in net income between third quarter 2013 and third quarter 2014, has had growth and good results at other locations, as well.
Bill Way, executive vice president and chief operating officer at Southwestern Energy, said both the company's play in the Marcellus Formation and the Fayetteville Shale has grown.
Way said Fayetteville had record production rates and at both locations the company is experimenting with new drilling techniques.
"We remain committed to growing our production and look for economic opportunities to add additional capacity to our portfolio," Way said. "It helps partially insulate the company during the slower times."
The Niobrara Formation spans parts of the Sand Wash basin. Steve Mueller, President and Chief Executive Officer of Southwestern Energy, said in the March news release that several characteristics of the basin make it attractive to the company.