Mesa Energy

From the “continues to be interesting” department: Mesa Energy, new owner of the Java Field in Western New York State, has started hydraulic fracturing of two Marcellus Shale wells in the Java Field. Yes, you read that right. Fracking is happening NOW. In New York State. The catch? They’re both vertical wells. Since fracking horizontally drilled wells is still on hold in New York, Mesa can’t drill horizontally. But they have received permission from the New York Department of Environmental Conservation to frack vertically on two of their wells—and they are doing it.

Mesa press release issued today:

DALLAS—Mesa Energy Holdings, Inc. (the “Company”), an exploration stage oil and gas exploration and production company with a focus on the Marcellus Shale in western New York, provides an update on its re-completion of the Reisdorf Unit #1 well in its Java Field prospect located in Wyoming County, New York.

The Reisdorf Unit #1 in the northern portion of the Java Field has been successfully re-completed and fracked in the Marcellus Shale. The well was perforated at a depth of 1,368’ to 1,389’ and fracked with 74,000 gallons of slick water and 105,000 lbs. of proppant (sand) combined with Nitrogen assist. Flow-back of the frac water is continuing according to plan. Although there is not yet sufficient data to accurately quantify the gas flow, there is clear indication of strong gas presence in the Marcellus zone. Planning for the re-completion and fracking of the Ludwig #1 is underway.

“We are very encouraged by the early data and believe that the performance of the well to date clearly supports our ongoing efforts in the Marcellus Shale,” said Randy M. Griffin, CEO of Mesa Energy Holdings, Inc. “We will continue to provide updates as new information warrants.”*

*Mesa Press Release/Business Wire (May 12) – Mesa Energy Holdings, Inc. Provides Reisdorf Unit #1 Update

Mesa Energy has received a green light from the NY Department of Environmental Conservation to convert two vertical wells in Western New York from Medina gas to Marcellus gas. We also learn from the press release that the Marcellus Shale layer in the Java Field owned and operated by Mesa is about 200 feet thick across the entire area—much larger than originally thought.

Mesa Energy press release:

Mesa Energy Holdings, Inc. (the “Company”), an exploration stage oil and gas exploration and production company with a focus on the Marcellus Shale in western New York today announced that the Company has received permits from the NY Department of Environmental Conservation to move forward with its re-completion plans on two existing Medina wells in its Java Field natural gas development project in Wyoming County, New York.

“An initial round of location maintenance, through-casing logging and evaluation was completed on the two wells in December 2009, and now that we have our permits in place, we can begin the next phase,” said CEO of Mesa Energy Holdings, Inc., Randy M. Griffin. “The preliminary data obtained in December 2009 on both wells clearly supports our project in the Java Field and now that we have received permits, we can proceed with the final planning and execution of the re-completion of both wells.”

The through-casing logs that were run in December 2009 indicated that there is nearly 200 ft. of high quality shale with good organic content in the Marcellus zone; nearly twice as much as the Company initially anticipated. The two wells are approximately three miles apart and the log over the Marcellus zone in each is almost indistinguishable from the other. This indicates that the Marcellus zone appears to be evenly distributed across the acreage.

*Press Release (Apr 1) – Mesa Energy Holdings, Inc. Receives Permit Approval

As MDN previously reported, Mesa Energy, which owns the Java Field in Wyoming County, NY, is planning to convert two of the 19 gas wells on the property from Medina sandstone wells to Marcellus Shale wells. These are already drilled, vertical wells. We now have more details about what Mesa plans to do with these two wells, and with the Java Field. They are moving aggressively with Marcellus Shale gas using vertical drilling, giving them a head start on other energy companies.

From a press release by Mesa Energy issued today:

Mesa Energy Holdings, Inc. (the “Company”), an exploration stage oil and gas exploration and production company with a focus on the Marcellus Shale in western New York has announced that it has begun initial testing in its Java Field natural gas development project in Wyoming County, New York.

The Company has selected two of its nineteen existing Medina wells for testing of the Marcellus Shale. The two wells selected are approximately three miles apart. The testing process began in December 2009 with an initial round of location maintenance, logging and evaluation and the two wells will be re-completed once the required permits have been approved. The data obtained in December 2009 will be combined with additional data to design a frac program for both wells with these operations expected to be completed in the second quarter of 2010.

The Company believes that there are multiple stacked pay zones present in the field, including the Medina and Marcellus Shale zones and, possibly, the Utica Shale zone, and that there is also significant potential to enhance the production and lifespan of the existing Medina wells using modern technology.

The Company recently announced the results of an independent engineering review of its material assets in the Java Field. Based on this review, as modified by the Company to better reflect the actual acreage acquired, the potential gas in place in the Marcellus and associated shales is believed to be in a range from 106 billion cubic feet (BCF) at 50 feet of shale thickness to 425 BCF at 200 feet of shale thickness. Based on these numbers, potential recoverable gas reserves using a 25% recovery factor and 200 feet of shale thickness would be approximately 106 BCF. The Company projects total potential net revenue over the life of the project to be as much as $405 million gross before expenses, or $332 million net of expenses ($151 million at PV 10). These projections are based on a price of $5 per thousand cubic feet (MCF) of gas.

CEO of Mesa Energy Holdings, Inc., Randy M. Griffin said, “The test results from the first two wells will be an integral part of our evaluation to determine the potential production capability of additional existing wells in the Marcellus Shale. We have already submitted permit applications and expect to receive approval shortly. We will update our shareholders on our progress.”

The Company believes that, in addition to enhancing its existing 19 wells, it can potentially drill and complete up to 80 new vertical Marcellus Shale wells on the project acreage and that the shales in the Java Field and surrounding area could provide an excellent opportunity to achieve significant daily production rates.

*Business Wire (Mar 25) – Mesa Energy Holdings, Inc. Announces Initial Testing in the Java Field

It seems hardly a day doesn’t go by that Marcellus Drilling News doesn’t observe a new press release, interview or other mention of Mesa Energy and their recent drive into gas drilling in Western New York State. The latest is a clever move by Mesa—they’re converting two of 19 gas wells they own in the Java Field from Medina sandstone to Marcellus Shale wells.

For about 30 years, the 3,235-acre site called Java Field has been home to 19 natural-gas wells, all of them sunk into Medina sandstone. Mesa Energy Holdings recently took ownership of the site, and it has submitted applications to the state Department of Environmental Conservation to convert two of those wells into Marcellus Shale wells.

The DEC hasn’t issued the permits yet, but has posted a notice saying it intends to.

Because Mesa is proposing traditional wells, rather than a deep horizontal well that would use hydraulic fracturing, its project can move ahead.*

What remains to be seen is if the vertical well transformation will yield production levels profitable enough to make it worthwhile.

*Rochester City Newspaper (Mar 22) – Marcellus Shale’s northern promise

Former New York Gov. George Pataki has joined the advisory board of Mesa Energy Holdings (headquartered in Dallas). Mesa holds leases and has active gas drilling operations in Wyoming County in Western New York State. Gov. Pataki, since leaving office, joined a law firm and started a consulting practice with a focus on environmental and energy issues.

According to the press release:

Headquartered in Dallas, TX, Mesa Energy Holdings, Inc. is a growth-oriented, exploration stage oil and gas exploration and production (E&P) company with a definitive focus on growing reserves and net asset value per share, primarily through the development of highly diversified, multi-well developmental and defined-risk exploratory drilling opportunities and the acquisition of solid, long-term existing production with enhancement potential. Although the Company is constantly evaluating opportunities in the nation’s most productive basins, the Company’s primary focus is currently on the Devonian Black (Marcellus) shale in the northern Appalachian Basin in western New York.*

Never mind the press release gobbledygook. What it means is this: Right now Mesa owns pipelines and active vertical wells in Western NY, but they’re betting big-time that horizontal drilling and hydro fracturing is coming to New York in the not-too-distant future, and they want an ace in the hole when it does. Welcome George.

*Business Wire (Mar 15) – Mesa Energy Holdings, Inc. Names Former New York Governor George E. Pataki to the Advisory Board