wolfberry - old ggp post by scottport

This old post provides some good contextual info that was absent from the company's ann.

cheers

re: permian basin (Scottport)
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Posted: 30/10/10 10:13 Stock Price (at time of posting): 1.629c* Sentiment: Hold Disclosure: Stock Held From: 220.238.xxx.xxx

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Found this article a few days ago, worth a read.

"Wolfberry brings attention to Basin
Comments 2
October 16, 2010 5:10 PM

As the 2010 Permian Basin International Oil Show starts Tuesday, many of the exhibitors and visitors could have a spring in their step.

The show, which runs through Thursday at Ector County Coliseum, will have 715 exhibitors. Tony Fry, Oil Show executive director, said he expects around the same 50,000 visitors who came to the 2008 Oil Show.

Oil prices are back above $80 a barrel. While that�s not too much above the $67 crude traded at during the 2008 show, attitudes are different. Last time, oil was on its way down to the $30s, while prices have been relatively stable in 2010.

Visitors drilling in the Marcellus Shale in Pennsylvania, as well as other parts of the world, are expected for the Oil Show, but the Permian Basin area has a major trend of its own.

The Wolfberry play has brought new drilling to a nine-county area of the Permian Basin in recent years. And that could pump up discussions at the Oil Show.

�We�re seeing that reflected here,� Fry said. �The service companies. The drilling companies. They�re all very busy.�

Kirk Edwards, a past president of the Oil Show and the Permian Basin Petroleum Association, said the Wolfberry play is having a major effect on the economies of Ector, Midland, Upton, Andrews and other counties.

�It�s probably about a nine-county area with Midland right in the middle of it,� he said.

The play has drawn attention recently, including a lengthy profile in Texas Monthly magazine. Interest in the play began in the late 1990s, when area geologists found ways to get oil from the Wolfcamp formation, located beneath the old Spraberry Field. The play became known as the Wolfberry because oil was extracted from both the Wolfcamp and Spraberry.

Edwards said that new ways of fracturing allowed the oil to become accessible when it previously wasn�t.

�The amount of production in the old Spraberry Field, which they thought was depleted, that amount has been doubled,� he said.

Now Edwards said there could be 2,000 new wells drilled in the region. At $1.5 million per well, that could mean adding $3 billion into the area economy.

�It�s a tremendous amount of money,� he said.

While drilling has picked up in the Wolfberry in the past decade, it�s been in the past few years that it has really exploded.

Edwards credits computer and stimulation technology with helping more companies find oil.

�They�re just stimulating these wells differently than they have in the past,� he said. �It�s just been tremendously productive.�

In recent months, companies like Linn Energy LLC of Houston and Berry Petroleum of Denver have made deals to buy Wolfberry assets for hundreds of millions of dollars.

J.L Farrell III, Berry�s Permian Basin asset manager, said the Wolfberry provides a great operating margin for drillers in terms of dollars spent per barrel of oil produced.

�The Wolfberry looks like a good, financially, economically sound play,� he said. �You get a good return on your investment.�

While not every spot in the Wolfberry�s geographic region will be productive, Farrell said it provides chances.

�It covers a very large geographic area,� he said. �If you get an acreage position, it gives you a lot of drilling opportunities.�

The play is also benefitting the state�s universities. At the recent University Lands oil and gas lease sale, a record $206 million was spent. Of that, $180 million came from El Paso Exploration & Production Co. for properties in the Wolfcamp Shale in four West Texas counties. Money raised at University Lands sales benefits the permanent university funds of the University of Texas and Texas A&M University systems.

Edwards said activity will remain strong in the area if prices remain in the $70 to $80 per barrel range.

�It�s already having a major impact,� he said. �What�s nice is it looks to continue for the next couple of years. It�s extremely positive for our economy.�"

http://www.oaoa.com/articles/oil-54379-exhibitors-visitors.html