The majority of Southwestern Energy’s natural gas production comes from its operations in the Fayetteville Shale
The Fayetteville Shale is located in the Boston Mountains, a subset of the Ozarks that runs through northwest Arkansas, southern Missouri, and eastern Oklahoma. This area has become a major source for natural gas production over the past few years. Most of Southwestern’s current E&P operations focus on the Fayetteville Shale.
Since SWN began operations in the Fayetteville Shale in 2004, the company has drilled and acquired substantial acreage in the play. Because SWN was the first to start substantial operations in the area, it was able to gain acreage rights at a very low cost of slightly above ~$300 per acre. (For reference, acreage in some premier plays such as the Bakken Shale has changed hands at over $10,000 an acre recent years.)
As of December 31, 2012, SWN had ~913,502 net acres (~1,400 square miles) included in its position in the Fayetteville Shale play, accounting for ~75% of total proved oil and natural gas reserves and ~86% of total oil and natural gas production. The company’s total reserves in the play at year end 2012 totaled nearly 3,000 bcfe. Reserves declined somewhat in 2012 versus 2011, as natural gas prices fell significantly in 2012, causing negative price-related revisions to the company’s Fayetteville reserve estimates.
Production has grown quickly in the play, as Southwestern has become extremely efficient at drilling natural gas in the Fayetteville Shale. The company has been able to reduce the number of days required to drill a well and reduce well costs. Meanwhile, average lateral lengths (the length of a well) have increased, meaning more production at a lower overall cost, as the company has gained experience operating in the area over the years.
In 2014, SWN plans to drill approximately 460 to 470 operated horizontal wells in the Fayetteville Shale.
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