EOG Resources Inc. reported a screamer Barnett Shale well in December-10 million cubic feet per day-in Johnson County. To those unfamiliar with the play, this may not be meaningful. To Barnett fans, however, the news further fracs the play's potential wide open-the flow is huge and the location is outside the traditional core area. Thousands of acres held by EOG and others in the county are theoretically worth much more since the news, and the rumble is being felt by acreage-owners elsewhere in what has been the noncore Barnett. So, just when prices for Barnett assets seemed high, there they grow again. Properties in the area have jumped from the 76 cents per proved thousand cubic feet equivalent (Mcfe) that Progress Energy Corp. paid Republic Energy Inc. and others for 195 billion cubic feet equivalent (Bcfe) of Barnett reserves in early 2003 to the $6.19 per Mcfe paid for another Barnett producer and its 40 Bcfe of proved reserves in Johnson County last summer, according to Houston-based investment banker Petrie Parkman & Co. The Barnett is proving to be no sleepy giant-it has produced surprises regularly in its roughly six years since making the E&P map when early play worker Mitchell Energy & Development Corp. began reporting initial results. Devon Energy Corp. bit early, buying Mitchell in January 2002 and getting 2.5 trillion cubic fee equivalent (Tcfe) of proved for $3.5 billion (a bargain $1.40 per proved Mcfe). It has had the chance to play the Barnett anthem at investor presentations ever since. And, the buzz is loud in the Fort Worth Basin. A relatively E&P-savvy region, some landowners are going to drill their own wells. Many are refusing leases longer than three years. Rumors of lease-flipping-acquiring acreage to accumulate and sell the bulk for a higher price-are running rampant. The lease-expiration clock is ticking too fast for some acreage-owners who can't get their hands on enough rigs. Some 100 were drilling there at year-end 2005 and most operators have announced plans to add more during this year. Yet, even pros have missed the Barnett train. From the core of Denton, Tarrant and Wise counties, where the oftentimes 500-foot-thick shale is found as deep as 7,500 feet, it screams updip westerly to as shallow as 2,500 feet in Erath County, in as few as 160 miles. One private-equity provider says the firm turned down funding Barnett-focused prospectors in the early 2000s because the play seemed to need at least $6 gas prices. "In hindsight, our view of gas prices was wrong and lots of people have made a fortune in the Barnett," he says. The firm never did invest in a Barnett player. For more on this, see the April issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
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