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Grapevine Company Ready to Drill: A Longtime Affiliation Provides Grapevine Operator Access to Rigs for Work in Barnett Shale

Posted on: Thursday, 22 December 2005, 09:00 CST

By Dan Piller, Fort Worth Star-Telegram, Texas, Fort Worth Star-Telegram, Texas

Dec. 22--A growing number of operators in the Barnett Shale have their leases, seismic imaging and drilling permits all in order and are ready to drill. But as the Texas natural-gas drilling boom grows and equipment grows scarce, many wonder where their next drilling rig is coming from.

Dyke Farrell, chief executive of Grapevine-based Reichmann Petroleum Co., doesn't have to wonder. He has firm control of five rigs, four of which are working in the Barnett Shale in Tarrant, Parker and Johnson counties. Another rig is working in the South Texas field in Duval County, where Farrell started Reichmann a decade ago and where the company still gets the bulk of the more than 2.5 billion cubic feet of natural gas Reichmann will produce this year.

The rig availability comes courtesy of Reichmann's five-year affiliation with Texas-Wyoming Drilling Co., which has supplied drilling rigs for the Powder River Basin field in Wyoming. The connection with Texas-Wyoming has given Farrell access to the rigs, an unusual asset for an independent as small as Reichmann. Farrell, 39, is counting his blessings.

"We're more integrated than the average small independent," he says. Several other Barnett Shale operators, most notably Sundance Resources of Rio Vista and Chesapeake Energy of Oklahoma City, are bringing their own rigs into the Barnett Shale, reversing the long-standing trend of operators leasing equipment from drilling companies. Shell Energy and Marathon Oil, majors with their own access to equipment, also have taken positions in the Barnett Shale, as has ConocoPhillips, which will come into the Barnett Shale when it takes over Burlington Resources' reserves.

Farrell, a Corpus Christi native, came to Dallas in the mid-1980s to accept a football scholarship to SMU. He never got to play for the Mustangs; the program was shut down by the NCAA for violations that occurred before Farrell arrived.

"I was all ready to play and had no program," he said. He stuck around SMU to get a finance degree, then applied it first as manager of a Hard Rock Cafe in Dallas and then as a vice president of Kinlaw Oil Corp., a South Texas producer.

When Farrell struck out on his own in 1994, he was following the path set by his wildcatter grandfather, Carl Reichmann, who had instilled the love of the energy industry in his grandson. Farrell honored his grandfather with the company name.

In Duval, Webb and Zapata counties along the Rio Grande, Farrell learned the tricks of partnering with big players like Marathon Oil and Kerr-McGee.

After a fast start, Reichmann's momentum slowed, and by 2000, Farrell was looking for a new base. With the Barnett Shale play emerging, Farrell linked up with Texas-Wyoming and its rigs and began taking out leases around Fort Worth.

Along the way, Farrell added Brent Mulliniks, who had worked with several Barnett Shale pioneers and helped develop the light sand fracturing that has helped coax natural gas from the less-permeable shale, and Dan Peters, a 15-year veteran of the Texas energy industry.

Reichmann has drilled 48 wells in the Barnett Shale and has seen its monthly production in the shale rise this year from 647,000 cubic feet in June to 13.5 million cubic feet in September. He plans to drill an additional 45 to 50 wells next year and expand the play into its 12,000-acre lease in Erath County.

Erath County is the next great frontier of the Barnett Shale. Naysayers insist that Erath's shale contains too much oil, making the gas harder to release. But Farrell thinks otherwise.

"We did a test well out in Erath, and it was OK," Farrell says. "But we think Erath will be more profitable than other parts of the Barnett Shale because the shale is 3,000-4,000 feet shallower than it is to the east. You can drill a well out there for half the cost."

Reichmann will have company in Erath County, including EOG Resources of Houston and Terax Energy of Austin and Infinity Oil & Gas Co. of Denver.

Majors such as Shell Energy and Marathon Oil have come into the Barnett Shale looking for new leases. Marathon may have taken positions in Bosque County, and Shell is in Parker County.

"We'll have company over there," Farrell says. "But it will be a good play."

Reichmann is building a new headquarters in Grapevine from which to oversee its 180-person work force. Reichmann has a larger work force than independents of comparable size because of its need to hire and retain crews for its drilling rigs. That's no easy task, with energy field workers in high demand.

"Hiring and keeping the crews is the hardest part of the job today," Farrell says.

Dan Piller, (817) 390-7719 danpil@star-telegram.com

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Copyright (c) 2005, Fort Worth Star-Telegram, Texas

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Source: Fort Worth Star-Telegram (Fort Worth, Texas)

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