From one rock sample, a new U.S. horizontal oil field may grow. Southwestern Energy Co. will attempt this fall to prove commercial oil production from the nearly century-old, Texas-to-Florida, conventional Upper Smackover play's source rock—the unconventional Lower Smack-over's Brown Dense.

The company has put together 460,000 net acres over the carbonate along the Louisiana-Arkansas border, in the backyard of the prolific Fayetteville shale-gas play it discovered in 2004. Today Southwestern is making 1.8 billion cubic feet equivalent a day from the shale. "It is interesting to note that this happens to be almost the same number of acres we had when we announced the Fayetteville," says Steve Mueller, Southwestern president and chief executive officer.

Southwestern provided a peek earlier this year: as it turns out, the Brown Dense is on the cover of its annual report, published this spring. The image shows a piece from one of two cores it found during more than two years spent researching the formation. The team started with logs on 1,145 wells in five states, reprocessed some 1,000 miles of 2-D seismic, and found data from the cores and cuttings of 70 wells that at least touched Brown Dense.

"We currently have more data about the Brown Dense than we had on the Fayetteville shale when it was announced," Mueller says. The piece of core sample that it was able to test is brittle. "I can't tell you the whole play is going to be brittle. But that's kind of a basis for encouragement for what we're doing."

Michael Bodino, E&P analyst for Global Hunter Securities, says the Jurassic-age Brown Dense is a "dirty carbonate, as it has streaks of porosity, fractures and shale throughout it."

At between 8,000 and 11,000 feet below the surface, it is 300 to 530 feet thick, Mueller says, and the oil is believed to be light—between 40C and 55C API gravity. Porosity ranges from 3% to 10% in Southwestern's lease window, it is over-pressured at 0.62 psi per foot, and permeability is less than 0.1 to more than 1 millidarcy. "Both porosity and matrix permeability are comparable to metrics reported in the Eagle Ford play in South Texas," Mueller adds.

Subash Chandra, E&P analyst for Jefferies & Co. Inc., says, "Horizontal technology could ignite the Lower Smackover play…A long lateral effectively capturing the potential of 10 vertical producers is the trick."

Southwestern plans a first horizontal in Brown Dense this quarter in Columbia County, Arkansas, drilling 8,900 feet vertically and 3,500 feet laterally for a completed cost of $10 million. Mueller says $2 million of that is for gathering data, including core of the entire prospective interval. A second horizontal, later this year, will go some 10,700 feet vertically and 6,000 feet horizontally in Claiborne Parish, Louisiana. Future wells—at least 10 are planned for 2012—may cost $7 million each, Mueller says.

EOG Resources Inc. put a vertical hole, Endsley 1-24H, into Brown Dense in 2009 and made noncommercial gas. Mueller says the well, which was near the Louisiana-Arkansas-Texas border, "was in the deeper part of the play than what we're really targeting." A short horizontal in Columbia County by Brammer Engineering Inc. and Anderson Exploration Energy Co. last year met with mechanical and fracture-stimulation problems; it tested a noncommercial 40 barrels of oil per day.

Southwestern has put together its leasehold for an average of $326 per acre. Should the formation prove commercial horizontally, it has the dry powder to aggressively develop it, says Andrew Coleman, E&P analyst for Raymond James & Associates Inc. Its long-term-debt to capitalization ratio is 27% while that of its peers is an average of 47%, "giving us faith management can accelerate the Brown Dense, if it works."

Devon Energy Corp. also plans a horizontal in Brown Dense this fall. It holds 40,000 net acres. Chandra notes that many producers, including Chesapeake Energy Corp. and Petrohawk Energy Corp., which will soon belong to BHP Billiton Ltd., have legacy acreage over Brown Dense, which sits below the Haynesville shale-gas play in northwestern Louisiana.

Lower Smackover is the source of hydrocarbons from several large conventionally producing fields, says Mueller. "Our hope is to use horizontal-drilling technology to unlock at least as much potential."

For more details on the Brown Dense, see UGcenter.com.