AOGR Features BKV COO in Natural Gas Playmakers

AOGR Features BKV COO in Natural Gas Playmakers

SEPTEMBER 2021

The “Better Business” Publication Serving the Exploration / Drilling / Production Industry

Stronger Fundamentals Giving Gas Producers Upside Opportunities

By Al Pickett and Danny Boyd Special Correspondents

With natural gas prices averaging their highest levels in years over the summer months, gas-weighted operators are seeing lots of reason for optimism as the market steadily marches toward a new winter heating season. Natural gas prices exited August above $4.00 an MMBtu and December futures were in the $4.40/MMBtu range, giving operators not only immediate upside price capture opportunities, but expectations for rising prices going forward translate to higher-value hedge positions down the road. By comparison, Eric Jacobsen, chief operating officer of Denver-based BKV Corp., notes that Henry Hub prices were only around $1.70/MMBtu last spring and into the summer when BKV was preparing to close on its acquisition of Devon Energy Corp.’s position in the Barnett Shale. “Natural gas is in a much better place than it was a year ago,” he relates. “Structurally, the market looks strong.”

Reproduced in part for BKV Corp. with permission from The American Oil & Gas Reporter

www.aogr.com

SpecialReport: Natural Gas Playmakers

las-Fort Worth metroplex, Jacobsen says the majority of BKV’s acreage is in Texas’ more rural Wise and Denton counties north of the metroplex. While he admits that what BKV is doing with its refrac program could be a blueprint for what the future may hold for other basins, Jacobsen contends that the distinct advantage it has is that much of the Barnett was drilled and completed in the earliest days of the shale revolution. “A lot of wells in other basins may not have as much untouched rock as we have in the Barnett,” he offers. In addition to refracs, BKV has plans to begin a new drilling program as early as next year. Jacobsen says it has 300 long laterals (8,000-10,000 feet) left to drill. “We like what we see,” he enthuses. BKV is the 17th largest natural gas producer in the country with approximately 370,000 gross acres in the Barnett and the Marcellus in northeastern Pennsylvania. Jacobsen says its Penn- sylvania acreage is strictly dry gas, while its Barnett Shale position in North Texas has the advantage of being a rich gas. The company is producing nearly 700 MMcfe/d (25% NGLs and 75% dry gas total. Its NGLs are sent to Mont Belvieu and other Texas Gulf Coast markets. “We have really fantastic marketing and pricing outlets in Texas.” he notes. Barnett Gas To Power BKV Corp. announced inAugust that it was acquiring a Texas power generator for $430 million in a move that leveraged its gas production to generate electricity. BKV is purchasing a 758- megawatt facility in Temple, a couple of hours south of Dallas- Fort Worth, from a 50/50 joint venture with Banpu Power. “We have had our eye on the Temple plant for some time. This will be an integrated value chain, taking wellhead gas to electricity in people’s homes,” Jacobsen details. “Our goal will be a closed-loop, net carbon neutral gas supply to electricity end users. We intend to ultimately sell green gas with the goal of achieving net zero carbon emissions.” The deal, which is expected to close in the fourth quarter, comes as Texas tries to encourage new gas-fired power generation to meet record demand. Many of Texas’ coal-fired plants have closed due to competition from cheaper wind and solar, leaving the state facing shortages during extreme heat and cold events.

Taking It To The Next Step BKV closed its acquisition of Devon’s assets in the Barnett Shale in North Texas last October. “I can’t say enough about what a great seller Devon was to work with or about the high quality work Devon did in the Barnett,” Jacobsen lauds. George Mitchell worked for years to come up with the right recipe for hydraulically fracturing the shale. After acquiring Mitchell Energy, Devon further revolutionized the development process by introducing horizontal drilling with transverse fracturing in the Barnett. “Devon did a great job following Mitchell, and now we are going to take it the next step,” Jacobsen claims. Because much of what was initially drilled in the Barnett was in the early pioneering phase of the play, Jacobsen says there is “a lot of meat left on the bone.” Therefore, BKV has a unique plan to re-enter a large number of existing wells with a restimulation and refracturing program. For example, Jacobsen says many of the laterals had 200- 500 feet between perforation clusters. BKV will go back in, bringing clusters as close as 20-60 feet. “We have 10 years of inventory available to keep our production flat, which we will exploit pending commodity prices and other factors,” he maintains. “That will generate a lot of cash flow with flat production to even slight growth. No one will be rewarded by outspending their cash flow.” The company’s restimulation and refracturing program has been underway for about four months, and BKV is set to add a second frac crew. Jacobsen says it is using a spectrum of innovative frac designs, from smaller to medium to large. “We like what we are seeing,” he adds, noting it is still too early to put quantitative numbers on the project. “But I can say the best-case scenario so far of our restimulation and refracturing program has produced 10 times the previous base production.” A lot of factors go into determining the design for each indi- vidual well. “We are doing it on a pad basis,” he states. “We are evaluating current wellbores, their producing history, offset wells and the cluster design of current wells, in our planning cycle. In the early days, they were in the learning mode. Now, we can look back and determine what job works best. Now we are in a continuous learning mode and rapid application ourselves. We are honed in on >Page 1 Page 2 Page 3

bkvcorp.com

Made with FlippingBook - Online catalogs