American Oil and Gas Reporter - February 2021 - 50

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SpecialReport: Operations America
aware that Devon wanted to divest of this asset, we went to
work. We had previously recognized the advantages of the
Barnett Shale, and in particular, Devon's basin-leading position.
Mitchell Energy had pioneered the asset beginning in the early
1950s, and started commercial development of the Barnett formation in the late 1990s before Devon acquired the company in
2001. The rock quality across the asset is among the very best
in the basin.
When we layered on the other benefits of this play-sizeable,
low-decline producing base, existing infrastructure, and the
business-forward and protective, yet reasonable, regulatory environment in Texas-we were excited to jump in. Entering the
Barnett with such a significant footprint not only diversifies our
company portfolio, but with our focus on innovation and technology, we are in great shape to maximize our base production
and execute on the rich opportunity set this asset offers.
The balance of liquids-rich and dry gas-approximately twothirds and one-third of the production volumes, respectively-
affords us the ability to access the natural gas liquids pricing
upsides and balance our commodity mix a bit across the
company portfolio. The NGL component may prove a very nice
cash generator for us in the coming period, given reasonably
sustained demand coupled with the drop in rich, associated gas
production in oily basins.

Q:

The Barnett deal encompasses 320,000 gross
acres and 4,200 producing wells. At the time
the deal was announced, net production from the
properties averaged 600 MMcfe/d. What kind of upside
does BKV see in the play? How do you plan to optimize
production over time?

JACOBSEN: After taking over operatorship of the asset on
Oct. 1, we commenced multiple production enhancement and
cost-reduction efforts. We are really pleased with the results
thus far, and have identified even more opportunities than we
had initially anticipated. We will be scaling up those efforts
throughout 2021.
As I mentioned, we are very focused on automation, implementing innovative ideas and applying new technology to
optimize base production. We have demonstrated great success
on all these fronts in our foundational Marcellus position and
are now applying these and more in an even larger way in the
Barnett. We are already executing some of this innovation on
existing Barnett wells.
We applied our automation and technology path to Barnett
wells by first programming, and then turning " on, " existing
plunger controllers in an auto-control mode. From there, we are
initiating another round of auto-control sophistication, seeking
improved monitoring and rapid response to highly accurate
predictive models and real-time variables alike. We also will be
monitoring the field conditions as a whole, including midstream
functionality and pressures, and making real-time adjustments
50 THE AMERICAN OIL & GAS REPORTER

or implementing strategic, longer-term projects to further
optimize production and reserves recovery at industry-leading
low costs.
The application of automation and technology enables quicker
and lower-cost production responses to changing variables;
allows for fieldwide, larger-scale monitoring and opportunity
generation; and enables a continuous and machine learning
cycle where outcomes can be applied rapidly.

Q:

What are the development plans for the properties in 2021? Will you be drilling and completing new wells? How about the midstream infrastructure? Does BKV own gathering and processing
infrastructure capacity in the Barnett?

JACOBSEN: As for drilling and completion development
opportunities, we are further evaluating those and certainly like
what we see on several fronts. For now, I'd say more on all of
this later in 2021. We are assessing what worked well and what
did not work as well in the past for Devon and other Barnett operators, evaluating the latest in drilling and completion technology,
reviewing the subsurface in detail, and building our plan on the
drilling and completions front.
At this point, our priorities and business strategy are to
deliver the best margins, generate cash, and grow more through
M&A and existing asset optimization than through the drill bit.
Yet, we will be more than ready and capable to drill and
complete some great rock in both of our basins when we see
that the market conditions are ripe.
Building out the gathering, processing and pipeline capacity in
the Barnett was a large piece of George Mitchell's business model.
It was also a large part of Devon's Barnett model for many years,
but Devon and CrossTex merged their midstream assets to form
the EnLink MLP that eventually spun off from Devon entirely.
None of these were a part of our Barnett acquisition and we do not
currently own midstream assets in the Barnett.

Q:

In its early days, the Barnett served as the
field lab for the evolution of much of the science behind modern shale gas development. One of
BKV's core corporate values is " a strong focus on
geoscience and engineering fundamentals. " How do
you see that manifesting itself in the Barnett assets?
What percentage of the producing wells are completed
in the Barnett formation versus other intervals? How
many are horizontal versus vertical?

JACOBSEN: With 4,200 wells and about 320,000 net acres,
our Barnett asset is ideal to apply automation and big data. We
have already automated about two-thirds of our wells producing
on artificial lift, which is yielding solid production improvements.



American Oil and Gas Reporter - February 2021

Table of Contents for the Digital Edition of American Oil and Gas Reporter - February 2021

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American Oil and Gas Reporter - February 2021 - Cover1
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American Oil and Gas Reporter - February 2021 - Contents
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American Oil and Gas Reporter - February 2021 - Cover3
American Oil and Gas Reporter - February 2021 - Cover4
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