plan vs actual , page-27

Reagan County seems to be picking up its production IP.




What Counties Are Experiencing Production Upticks? Some Pioneer And Devon Notes

by Chris Smith

Aug 18 11


As has the been case over the last year, operators in the Midland Basin Wolfberry play have been drilling deeper verticals, targeting more zones, and fracing more of the wellbore. Below I used Drillinginfo Allocated Production to investigate which counties over the last few years have been experiencing the greatest uplifts in max monthly production due to the newer practices. This chart only uses wells drilled in the traditional Wolfberry sweetspots used in DNA. The delay in reported production accounts for the 2011 well count dropoffs.

The counties with the greatest uptick are Crane, Ector, Reagan and Glasscock. The counties with the least apparent gains are Martin, Gaines (no pun intended), Sterling and Andrews. This is based purely on a best fit and doesn’t normalize for well count and operator etc. The heavy duty, normalized analysis is reserved for DI-ESP clients of course.

Here are some operator notes from recent investor talks, presentations and conf calls.

Pioneer

* Pioneer continues to test the deep Mississippi and Atoka zones with success

* The deepest zones require intermediate strings to be run and therefore increase cost significantly, about $700M. Some of the deep zones are clay rich and require a CO2 frac to reduce swelling which also increases the cost. I believe the D&C cost for a intermediate cased, CO2 fraced well is about $2MM. The production upside could be EURs of > 200 MBOE.

* This is done by drilling the deepest zone first and testing it. The additional cost to go deeper is marginal. If the deep stuff works, they complete it. They commingle the shallower zones as time goes on. Interesting stuff.

Devon

* Devon has been busy running 5 Wolfberry rigs, and intends to drill 135 wells in 2011 over their 160k net acre position. They along with Pioneer and some others will be testing horizontal wells. I imagine these horizontal wells will be targeting some interval of the Wolfcamp shale.