Operator Executives Share Haynesville Development Strategies
Authors: Zborowski Matt 
Published: May 2019

Indigo Natural Resources, Aethon Energy Management, and Rockcliff Energy II are among the most active operators in the revived Haynesville Shale of North Louisiana and East Texas. And most people outside of the region have likely never heard of them.
Such is the story of the bulk of the top producers in the dry-gas-rich Haynesville, which differs from its peer group of big shale plays that are led by majors and big independents. While Chesapeake Energy, XTO Energy, and BP each has a presence there, it is the lesser-known privately-owned, largely pure-play operators—with their new completions and midstream partnerships—that have accounted for much of the play’s output increases.
Those companies began entering the play a few years ago when many of the bigger operators were turning away from dry gas. The mergers and acquisitions continued through 2018, when, notably, Aethon struck a deal to buy QEP Resources’ Haynesville-Cotton Valley acreage for $735 million and BP more than tripled its Haynesville position through its purchase of BHP Billiton’s US shale assets.
Indigo, in particular, over the past 4 years has aggressively leased and acquired acreage in North Louisiana. The company targeted the Louisiana portion of the play because it benefits from the ability to drill north-south with cross-unit laterals and forced pooling, said Frank D. Tsuru, president and chief executive officer of Indigo, during a recent SPE Gulf Coast Section panel discussion of Haynesville executives in Houston.
The Houston-based company has amassed 435,000 net acres and, through Momentum Midstream, has “built a fully integrated, very large-scale mid-stream business to complement it,” said Tsuru, who also serves as Momentum’s CEO. Indigo currently produces around 1.3 Bcf/D, up from 200 MMcf/D in 2016, with proved reserves of 4.7 Tcf.
Preston Phillips, vice president of acquisitions and divestitures of Dallas-based Aethon, said his company took “a contrarian investment strategy” that involved building a position in Haynesville when it could basically “buy upside for nothing” as others had given up on the play. “Now that we’re a significant player, we will continue to make acquisitions and bolt on to our position,” he said.
Aethon currently has 186,000 net acres in the Haynesville consisting of a large position in North Louisiana as well as a less mature position in the Shelby Trough play of East Texas, a portion of which it bought from Rockcliff Energy.
Most of its position either has the Bossier formation underneath it or Cotton Valley sands above it, he said. “We’re already doing Bossier development and seeing great success. The Cotton Valley’s got a lot more water, so there’s some cost issues to unlock there, but we’re working hard on it.” Around 70% of the operator’s inventory has been drilled using 7,500-ft and 10,000-ft laterals.
“Fortunately, there’s a large number of LNG plants and petrochemical projects that are being developed in the Gulf Coast,” Phillips said. “And that demand is why we think we’re very well positioned being in the Haynesville play relative to the other basins.”