Southwestern Energy Co. of Houston reported this week it had drilled its "best well to date" in the Lower Smackover Brown Dense formation.
According to the company's third-quarter earnings release, production from the well reached a peak rate of 600 barrels of oil and 1.3 million cubic feet of gas per day, or the equivalent of 800 barrels of oil per day.
"We will be drilling and completing three additional vertical wells in 2013 to test more of this project," CEO Steve Mueller said in the release. "We believe our curiosity and innovation will keep driving us higher up the learning curve as we work to unlock more value from these resource plays."
Arkansas Business reported in August that Southwestern Energy was continuing to drill test wells in the Brown Dense area, including in Arkansas. It and other energy companies have been drilling test wells in the area to determine whether it's economically viable to retrieve the oil that's locked deep in the formation.
Southwestern Energy has drilled a total of 10 wells in the Brown Dense, five of which are testing or producing. One is awaiting completion and another is drilling. The wells are scattered across southern Arkansas and northern Louisiana.
The Lower Smackover Brown Dense formation covers southern Arkansas and northern Louisiana. The formation ranges in depths from 8,000 to 11,000 feet, according to Southwestern Energy’s website.
Experts have estimated that drilling a well in the Brown Dense Play costs about $20 million. To make drilling a success, Southwestern would need to produce several hundred barrels of oil a day on a sustained production basis. A barrel is the international standard for oil and equals 42 gallons of crude oil.
While no company has seen success on the Arkansas side of the Brown Dense, Southwestern has reported progress on wells in Louisiana.
Meanwhile, production from Southwestern's gas wells in the Fayetteville Shale reached 10 MMcf per day, which the company said was also a record.
Southwestern's net income reached $185 million in the quarter, or 53 cents per diluted share, compared to a loss of $54 million in the same quarter of 2012. Revenue was $868 million, up from $691 million in 2012.
Mueller said the quarter was a success and credited it mainly to its record production.