Feb 6, 2013 20:28 Devon’s lease acreage for sale Devon’s lease acreage for sale by Ted Griggs| Advocate business writer Feb. 06, 2013 Comments A decision by Devon Energy Corp. to sell roughly 297,000 acres of leases it owns in the Tuscaloosa Marine Shale may have more to do with the company’s operations than the formation’s profitability, according to energy industry experts. “It’s not really that uncommon to see companies move in and out of plays and move assets from one play to the other,” said Don Briggs, president of the Louisiana Oil and Gas Association. “I don’t think it’s indicative at all of the Tuscaloosa’s capabilities of being a viable play. ...” Companies are still figuring out the best way to drill in the Tuscaloosa, where well costs are higher than other areas of the country because the oil lies thousands of feet underground, Briggs said. In January 2012, Dave Hager, Devon’s executive vice president of exploration and production, said the company hoped to lower its Tuscaloosa well costs by 30 percent to 40 percent to the $12 million to $14 million range. Tuscaloosa wells range from 11,000 to 15,000 feet in depth. In North Dakota’s Bakken Shale, the average well cost is about $8.5 million. In Texas’ Eagle Ford Shale, well costs have been reported at $6 million to $10 million. Devon, of Oklahoma City, had been considered a leading operator in the Tuscaloosa, which covers the middle portion of Louisiana. But Scotia Waterous Inc., the oil and gas arm of Scotiabank, announced Monday it had been hired by Devon to help sell the company’s working interest in the shale. Devon owns a two-thirds interest in the Tuscaloosa acreage. The remaining third is held by Sinopec, or China Petroleum & Chemical Corp. Devon spent about $50 million acquiring the leases. Scotia’s fact sheet says Devon has drilled eight wells in the formation. Six of those wells are active, with total production around 600 barrels of oil per day. A seventh well is expected to begin production in February. Bids on the acreage are due March 13. Scotia also is handling the sale of Devon’s 244,000 acres in eastern Ohio’s Utica Shale. In his blog on the Tuscaloosa Trend, Amelia Resources LLC President Kirk Barrell said Devon’s operational approach has generated many questions. Devon didn’t drill into the most productive layer of the shale in any of its wells, Barrell said in his blog. In addition, Devon used minimal amounts of proppant, the material that keeps fractures open after the drilling fluid has been pumped out. Oil is released through the fractures. “The minimal proppant levels make the probability of achieving an economic well even more unlikely,” Barrell said. Briggs said the proposed sale of the Devon lease probably has more to do with competition from other formations where well costs are lower and profits may be greater. “You can drill just about anywhere you want to,” Briggs said. “Depending on where they have their assets and where they want to operate at, it makes it a lot easier for them.” Briggs said the company has been reorganizing, and selling its sizeable Tuscaloosa acreage may be a continuation of that.