Sligo Revamp Gives Boffo Returns
New Insights Into Old Field Rewarded
Oil and gas activity in South Louisiana ordinarily tends to garner way more attention than the action in the northern part of the Bayou State.
But even though it may occupy a lower position on the buzz-scale, North Louisiana has a long history of drilling and production that continues today – and some of its very old fields are being revitalized big-time.
Sligo Field – which was discovered in the late 1930s – is one example that should serve to inspire the prospectors out there who are picking over the remains of mature properties in hopes of finding untapped reserves.
When AAPG member Michael Geffert and Joe Bridges, managing partners at Greystone Oil & Gas LLP, first took a serious look at Sligo Field in Bossier Parish in 1995, it already had produced more than 500 BCFG from the Hosston formation – yet they suspected there was plenty more gas left in the ground.
The two oil finders had extensive experience in the Upper Jurassic and Lower Cretaceous reservoirs in the Ark-La-Tex area, where they had completed hundreds of wells.
“We were especially familiar with the fields and structures immediately east of Sligo Field where the structure, dip, traps and reservoirs were almost identical to Sligo,” Geffert said.
“We understood the reservoirs,” he added, “and after taking one look at the field, we realized there was a good chance the operator at the time (Pennzoil) had left a lot of gas behind.”
Working together under the banner of Greystone Petroleum LLP, the duo began what would become a year-long evaluation effort to verify their opinions. Because of the age of the field, the evaluation required considerable manual data gathering in addition to acquiring readily available information from public sources.
The project became more than just a field study.
In fact, the partners concluded an adequate evaluation would entail correlating all of the logs in this series of sands from the Texas-Louisiana state line and east to Monroe in order to acquire a correlation with sturdy enough legs to stand up over time.
Geffert also did a turnaround and correlated back to the state line to ensure there would be no drift in their correlations and evaluation.
To put this into better perspective, about 2,000 logs were utilized.
The study included identification of the perforated interval history for the entire life of each well to determine the exact source of the production. Bridges said they correlated about 70 reservoirs and determined thicknesses in order to isopach the sands.
Incorporating all of the essential data, a material balance analysis indicated that more than half of a Tcf remained in the Hosston formation alone. A number of other reservoirs were identified as potential contributors – including Upper Jurassic Cotton Valley, which Bridges said is the second most important source of remaining reserves.
He emphasized that the total reserves estimate applied to the entire field and not just the two-thirds owned by Pennzoil.
Purchasing the field became an effort that kind of took on a life of its own.
“We made our first offer to buy (the Pennzoil portion) in 1996,” Bridges said, “and for six years we kept making offers to Pennz, UPR (which almost purchased Pennz) and, finally Devon.”
The deal ultimately was cut with Devon Energy in March 2002 and carried a price tag of $131 million.
It was a giant step, requiring a heap of confidence.
“One of metrics of a purchase that many people notice is dollars of purchase price per Mcf,” Bridges said. “We set a record for the most dollars paid per Mcf of daily production with that purchase – it was a handsome price.
“Likely, the general consensus was we paid way too much,” Bridges noted. “But we had done a lot of work and felt like things we saw, evaluated and could make happen – that made the price worthwhile to us.”
They were right, but making it all work was a challenge.
“Our initial business plan when we purchased it was to recomplete wells,” Geffert noted. “This was not a failure, but we weren’t coming up with the flow rates we needed.
“We found too many bridge plugs to drill through, bad cement behind pipe, poor pipe integrity and other things,” he said. “So we re-grouped and re-ran our reserves projections and came up with the same number as before and decided to re-drill wells.
“When we re-drilled, we took a formation pressure test in every gas producing reservoir in the wellbore,” Geffert added. “We found that depending on where we were that 50 to 60 percent of the reservoirs were virgin pressure, and when we began completing and commingling all the producing reservoirs, we started flowing a lot of gas.”
The flow was sufficient to grab the attention of Chesapeake Energy, which bought the field in May 2004 for a hefty $425 million.
“When we purchased the field, the Pennzoil net interest was making about 9.5 million cubic feet a day,” Geffert said. “When we sold to Chesapeake, we were making more than 61 million cubic feet a day with three wells being completed, three wells drilling.
“Additionally, there was going to be a fourth rig, so we could easily have jumped over 65 to 70 million cubic feet a day.”
While the ultimate reward was sizeable, the yearlong evaluation and the ensuing six years spent trying to make the initial purchase would challenge most anyone’s determination.
“There were times when we had our doubts, because six years is a long time,” Bridges said. “We had other projects going on, but that was the project that captured our interest in which we had put a great deal of effort and which we thought had a great deal of opportunity.
“That notion was not widely held,” Bridges noted, “but we believed it and stayed after it.”