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The Fayetteville Shale play in the Arkansas portion of the Arkoma basin is one of the most active natural gas E&P drilling areas in North America. The play is dominated by Southwestern Energy Co., which has drilled 263 wells since 2004, and the company currently produces 155 MMcfgd from the Fayetteville Shale. Other key operators in the play include Chesapeake Energy, Devon Energy, KCS Resources, Yale Oil Associates, XTO Energy and Tepee Petroleum Co. Cumulative production from the Fayetteville is about 29 Bcfg, and per-well reserves on 80-acre spacing are estimated by operators in the play to range 1.3-1.5 Bcfg. Based on data from 187 Fayetteville wells provided by IHS and the Arkansas Oil and Gas Commission, I find little economic justification for the play at present. None of the vertical wells that I analyzed will recover drilling and operational costs. Only 3 of the 136 horizontal wells will be economic...

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