The Fayetteville shale play could be the new Barnett, and the land grab is far from over. Acquirers who thought it's too late and the best acreage is all held by major players have missed opportunities, says Houston-based Petrohawk Energy Corp.'s Steve Herod, executive vice president of corporate development.

"It's like the Barnett was three to four years ago," he said at the sixth annual A&D Strategies and Opportunities conference recently, presented by Oil and Gas Investor and A&D Watch. "There's a huge amount of activity out here. It's really exciting."

Many E&P companies have the mistaken perception that the best opportunities in the Fayetteville are already gobbled up, specifically by Southwestern Energy Co. and Chesapeake Energy Corp. "A lot of people say everything in the Fayetteville is leased-Southwestern's got it all or Chesapeake's got it all. That's not really the case."

A year ago, Petrohawk had no position in the play until acquiring 7,000 net acres as part of a merger with KCS Energy Inc. in July 2006. It began drilling in the first quarter of 2007 with excellent initial results. Following two negotiated deals this summer, it currently controls about 85,000 acres and more than 90 operated sections with eight producing wells. By year-end, Petrohawk expects to have a four-rig program with 25 operated and 40 nonoperated wells.

"It's very competitive; we understand that," he said. "We had some early success and made a strategic decision to take advantage of that and ramp up our position quickly. We could have sat back and said, 'These properties weren't available,' or 'Look at Chesapeake's and Southwestern's acreage,' and wish we had more.

"But we decided to move aggressively and it's worked real well for us. We have an excellent position in the heart of the play and look forward to executing our drilling program to develop the acreage."

The results have been positive to date, he reports. Several Petrohawk wells have had initial production rates of more than 2.8 million cubic feet per day, and a couple came in at more than 3 million. "We've been very encouraged by the results so far," he said.

Other operators in the area have experienced success too, so "the viability of the whole play looks good at this point. We want to continue to expand our position and take advantage of our technical expertise.

"This is why so many companies are moving into the Fayetteville. It's going to be a good economic play for our industry. There's going to be a great deal of activity there in the next few years."

The Fayetteville play has developed much quicker than did exploitation of the Barnett shale, he added. Geologically, the Fayetteville is equivalent to the Barnett, but the Fayetteville has reached production of more than 125 million cubic feet per day in only two years, while it took 18 years for operators to reach that level in the Barnett.

"The development of the play has happened much quicker than the Barnett," Herod said, because "the industry has taken what it's learned from the Barnett and transferred it to the Fayetteville. What took years and years to learn, such as how to most efficiently frac wells and drill horizontally in the Barnett, has just moved right to the Fayetteville and worked real well. There's less trial and error."

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