EnerMax Rethinks the Austin Chalk
The sounds of oil & gas drilling are steadily humming in South Texas. At more than $55 a barrel, oil companies are picking up their drill bits and grinding away like never before. This is especially true of the Austin Chalk Trend in South Texas. Once thought to be past its peak, the Austin Chalk has recaptured the attention of prominent companies within the industry. What’s changed? Two things: First, the refinement of horizontal drilling techniques has reduced the overall cost of exploration while maintaining or increasing extraction rates. Second, commodity prices are making even modest-sized reservoirs very attractive. EnerMax, Inc. is one of the companies currently working in the Austin Chalk. Bret L. Boteler, president of EnerMax, Inc, directed his company in 2006 to acquire approximately 11,000 acres in order to exploit the vast reserves still present. “The Austin Chalk has already produced millions of barrels of oil, but experts believe oil reserves for this trend should be calculated in the billions. That’s exciting.”
The first wave of activity occurred in the Austin Chalk in the 1980’s with the discovery of the Giddings Field. Initial production rates immediately got the attention of big name exploration companies. However, it wasn’t long before short production lives and rapid decline curves led many to think the Austin Chalk was done. As it turns out, it was just waiting for its moment.
The key to the Austin Chalk is horizontal drilling. During the first boom, production was obtained using vertical wellbores, which were only able to extract oil & gas from a small area surrounding the base of the well. With today’s technology, horizontal drilling can penetrate multiple hydrocarbon zones using just one wellbore. A horizontal well is like an upside down tree. It has a trunk, or the wellbore. It also has two to four long branches, called laterals. The laterals are able to drain a significantly larger area than a traditional wellbore. It does the work of three or four traditional wells and costs significantly less than that of drilling each individual well.
“One of the potential advantages of drilling in the Austin Chalk is that initial flow rates are usually very high. This means a quick recovery time for initial capital and, at these prices, an excellent profit margin,” said Boteler. At these prices, that is certainly true; but Boteler may have even more to be excited about before the year is up. Boone Pickens, the billionaire oil tycoon from Dallas, predicted in October that crude oil will reach $70 a barrel before the year’s end. “I think you’ll see $70 before you see $50,” said Pickens. He then added that oil would reach $100 a barrel by July 2007. Understanding the energy market is Mr. Pickens’ forte. He made his fortune by accurately predicting the direction of crude oil, gasoline, heating oil and natural gas futures.
Operations have already begun for many of the projects EnerMax has planned for the area, and should continue through 2010. “It’s all about timing,” said Mr. Boteler. “It’s taken more than 20 years for the technology to develop, but finally we have the ability to realize the full potential of the Austin Chalk.” The Austin Chalk has found its moment.
This article includes “forward-looking statements” as defined by the Securities and Exchange Commission. Such statements are those concerning forecasts, estimates, expectations and objectives for future operations. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future production, reserve additions and capital expenditures are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or lack of availability of goods and services, environmental risks, drilling risks and regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected.
Published Monday, November 20th, 2006 at 9:32 am and filed under Articles.