Encana Corp. will move forward with drilling in New Mexico’s San Juan Basin Back to Blog
The Denver-based U.S. unit of Canada’s Encana Corp. will move forward with drilling for oil in New Mexico’s San Juan Basin, which could be among the nation’s newest resource plays. The San Juan in northwestern New Mexico has similarities to other established oil plays regarding improvements due to new horizontal drilling and hydraulic fracturing (fracking) techniques. As part of the company’s first 2013 quarter results announcement, Encana Corp. (NYSE: ECA), based in Calgary, Alberta, Canada, said its San Juan acreage is commercial, meaning the company believes it can profitably drill and produce in New Mexico San Juan Basin. Encana, like many energy companies across the country, has stepped up its search for oil due to the comparatively low level of natural gas commodity prices. Of course, drilling in New Mexico has not been new to them, as Encana and its partners have drilled several horizontal wells into the Mancos shale formation. Encana spent about $100 million in the basin in 2012 and expects to spend about the same amount in 2013 according to a company spokesman. Encana has 160,000 net acres of mineral rights in the basin and running two drilling rigs — with a third drilling rig expected to be moved into the area by the end of the year, the company said. The last five wells Encana drilled in the San Juan area had initial, 30-day production rates of oil, gas and natural gas liquids (NGLs) ranging from the equivalent of 150 barrels of oil per day to 700 barrels of oil per day. About 80 percent of the total production was oil, the company said. Wells have cost between $5 million and $6 million each to drill. The company has also just reported a swing to a net loss for the quarter of $431 million, or 59 cents per share, on revenues of $1.06 billion. That compares to a profit of $12 million, or 2 cents per share, on revenues of nearly $1.8 billion for the first quarter 2012. The company also reported operating earnings of $179 million, or 24 cents per share. The company blamed its first quarter 2013 results on hedging and foreign exchange losses.