What a typical small operator experiences in the Barnett shale play
Gerald and Monica Hess do business as Jerry Hess Operating Co. (JHOC) in Muenster, Cooke County, Tex., a typical small operator in the Barnett shale play, with about 1,341 acres under lease for Barnett drilling. They have been in the oil and gas business since 1980 and became interested in the Barnett because they owned leases in Denton County that were directly offset with Barnett drilling by other operators.
JHOC drilled its first Barnett well in October 2000. It has since drilled a total of 14 Barnett shale wells, 13 in Denton County and 1 in Wise County, and have two wells waiting on frac. Of the 12 wells now on line, JHOC considers 11 Denton County wells successful; the well in Wise County makes significant water.
Drilling costs for JHOC in 2003 ranged from $159,000 to $175,000, taking 3-4 weeks/well. JHOC used Jimmy Jack Biffle Drilling, Muenster, Tex. This small drilling company runs one oil & gas drilling rig, in addition to a fleet of water-well drilling rigs. (Jimmy Jack Biffle also drilled a water well for President George W. Bush on his Crawford ranch.)
Frac costs for JHOC in 2003 ranged from $119,000 to $144,000/well. They use PumpCo Services, a subcompany of Ortowski Construction Co. Inc., Gainesville, Tex. Total drilling and completing cost for Barnett wells in 2003 ranged from $547,000 to $606,000 from spud to first sales.
Hess usually designs a two-stage frac, but ran a three-stage frac in a Denton well in late December because of an unusually thick productive zone. The lowest interval is fractured first, in a 1-day operation usually beginning at 8 a.m. and finishing by 1-2 p.m. Hess told OGJ that the lower Barnett is thicker and takes more water. This zone is allowed to flow back for 2-3 days, isolated, then a higher zone is fractured and flowed.
JHOC is a family business. Daughters Laura Pagel and Penni Haverkamp both work for the company.
Pagel, office manager since 1993, reports that JHOC plans to drill at least six Barnett wells in 2004. The company files all drilling permits (W-1s) online using the electronic compliance and approval process (ECAP) with the Railroad Commission of Texas. Pagel told OGJ that electronic filing has reduced the approval time in some cases to less than 24 hr, from 7-10 days usual with paper filing.
JHOC operates about 70 wells in nine Texas counties, handles more than 1,000 royalty, overriding royalty, and working-interest owners, and uses more than 800 vendors. The company relies on Roughneck Systems (Forney, Tex.) platinum edition software for accounting and revenue distributions.
