UPDATED: April 11, 2017
The headlines continue to highlight positive developments by operators in the SCOOP/STACK plays in Oklahoma. But who is participating in the production streams BESIDES the operator? What non-operated interests or overriding royalty interests are participating right alongside the operator?
Or who was the initial grantee actually leasing for?
We’re lifting the curtain with the release of assignments in the SCOOP/STACK—in a big way!
Here’s what we’ve released..
Find out what’s been assigned—and what’s not been assigned…yet. Create AOIs around the areas that you want to watch for future opportunities, and do it with this level of detail.
Not only can our customers view assignments online within Drillinginfo, they can also create a leasing report in Drillinginfo for areas that they’re interested in. An example is this report on Kingfisher County, OK (STACK play) which shows 1 of 11 new leases taken as recently as 3/15/2017.
Use this tab in Drillinginfo to start creating custom reports.
Combining customized leasing reports with the power of our DI SCOOP/STACK play assessments is a powerful enhancement to operators who want to unlock current opportunities in these plays.
On November 16, 1907, Oklahoma became the 46th state to enter the Union. About a decade before that, in the then Indian Territory, Miss Jenni Cass dropped a “go devil” detonating device downhole and The Nellie Johnson no. 1 well became the first commercially viable oil well in the Territory. Fast forward to July of 2015 and we find the State of Oklahoma contributing the 6th most crude oil and 3rd most natural gas in the country. Not only is Oklahoma therefore in a combined 5th place in terms of energy resource production, it is also the home to the Cushing hub, where orders for West Texas Intermediate (WTI) oil futures are settled for the New York Mercantile Exchange.
Much of the news that comes out of Oklahoma lately centers around the disposal water quake controversy, and relative financial health of a few of the very large operators who are headquartered there. The recent selection of Paul Ryan as Speaker of the House has an interesting Oklahoma angle given that his wife Janna Little Ryan’s family has a rich Oklahoma political history. (Their family dogs are Boomer and Sooner).
Of particular interest to me is that when we look at a current heat map of permitting activity for the past 30 days, coupled with current active rigs, we clearly see that Oklahoma, particularly the Woodford Shale play in the Anadarko basin, is one of the nation’s bright spots.
Image Source: Drillinginfo Activity Maps
The SCOOP and The STACK
We’ve written about the South Central Oklahoma Oil Province, or SCOOP, before and how it’s exciting because it tends to be a little more liquids-rich. Operators, such as Magnolia, continue to expand their drilling plan for the play.
The competitive (because of geography and branding more so than geology) Sooner Trend Anadarko Basin Canadian and Kingfisher Counties, or STACK play has started to get a lot of interest lately, also due to its potential for liquids. STACK operator Newfield Exploration is one of the best-performing stocks in the S&P 500 this year.
In a presentation earlier this year, another STACK devotee, Felix Energy, talked about the performance they have been getting from applying new technology to the play area. 3 things caught my eye in this presentation:
- No produced formation water – they’re drilling for hydrocarbons and not having to deal with water disposal (!)
- Horizontal redevelopment with modern stimulations has yielded tremendous economic results – New horizontal wells 50x original vertical wells (!)
- Proponent of Slick Water proppant, and in 2015 using up to 2000#/ft (!)
The Woodford Shale and Hunton Group and the more recently targeted Springer Shale span from the late Ordovician into the Mississippian in geologic age.
Image Source: Drillinginfo South-Central Oklahoma Basins Play Assessment materials
If we look at the last 90 days of rig counts by county in the Woodford Shale, we see a slight pullback in the clear leader Grady from 16 to 12 rigs, a slight contraction from 8 to 7 in Canadian County, and a nice rally in Blaine County from 3 to 8. The Other STACK County, Kingfisher, is riding in fourth place, having gained a rig over that time period.
Image Source: Drillinginfo Rig Analytics
Looking at that same time period in just SCOOP and STACK counties, and cross referencing the targeted formations, we see a clear preference for the deeper Woodford and Hunton formations.
Image Source: Drillinginfo Rig Analytics
Woodford Shale New Production Capacity
On November 12, Drillinginfo will release its latest DI Index of New Production Capacity (NPC), which couples rig activity with active permits, compares the new wells’ performance with comparable wells, and creates an estimate for the capacity that will be brought online from that well in the next few months. This next image compares the NPC for Woodford Shale counties from October’s activity.
Image Source: Drillinginfo Basin-Level NPC reports
The amount of natural gas capacity coming online from the more easterly Hughes and Pittsburgh Counties is certainly striking, all the more so given that there are only 8 rigs generally running around the two. Just more evidence about how much more efficient the gas producers are getting at their game.
Next, Two of the top Five counties on the chart are Canadian and Kingfisher (and the final top fiver is neighbor Blaine), further reinforcing the current investment (and potential results) of the STACK play. And then, also with respectable numbers, Stephens, Grady, Garvin, and Carter show how the heart of the SCOOP is performing.
What do you think? Leave a comment below.
Ok, so Oklahoma.
A few months back we took a look at the SCOOP and the STACK plays in Oklahoma, and we determined that although activity had dropped off a bit (in relative accordance with the rest of US onshore activity) there was still a lot of focussed activity going on there. Because of the recent heavy news interest in Oklahoma Oil and Gas, I thought it would be a good time to take a look at Oklahoma operations.
Oklahoma in the news
The big news item in Oklahoma, of course, has to do with the price-fixing lawsuit against, and subsequent death of Aubrey McClendon. McClendon was the longtime head of Natural Gas behemoth Chesapeake, and more recently the collection of American Energy Partners. We will take a look at some key operations of those companies.
The second big news item is that Oklahoma regulators have ordered a 40% reduction in the number of injection wells in a significant O&G area in the central part of the state as a stop gap against the assumed link between those injection wells and the increased earthquakes in the region. We’ll take a look at how that ruling might affect operations on the ground.
The third (and possibly most juicy) news item is Chesapeake Said to Weigh Sale of Assets in Oklahoma Stack Region. The terrible outlook for natural gas prices (which has Chesapeake selling $0 gas in some analysis) has forced them to look at their oil-soaked STACK acreage for cash. We’ll take a look at how Chesapeake is staked in the STACK, and how the STACK is faring.
And as a final item, E&P companies in Oklahoma are fighting against wind subsidies. This is interesting to me because of the link to out-of-state beneficiaries of the policy (and the perceived negative impact on natural gas demand). The timing on this issue seems to be appropriate due to the 7% reduction in state spending from a $1.3 billion dollar reduction on state energy tax collections. I won’t do any additional analysis on this item, but thought it was relevant to the overall discussion of Oklahoma.
Chesapeake and AEP Growth and Range
Figure 1 – Chesapeake Active Wells through December 2015, colored by trajectory, sized by 6 month cumulative gas (Source DI Production Workspace)
In Figure 1 we get a sense of the national network of natural gas success that Chesapeake has developed, largely during the McClendon years, although they continue to expand on those pathways. We see a background of vertical wells throughout the Mid-Continent, and extending over into the Arkoma Basin, as well as up east through West Virginia. But where Chesapeake has made it’s mark is the horizontal activity, and we see a clear focus on the biggest natural gas basins: in the south we see centers of activity in the Barnett, the Haynesville to its east, and the gas-rich southern part of the Eagle Ford; In the Appalachian Basin we see twin clusters of Pennsylvania Marcellus and Ohio Utica; and there are smaller bits of activity in New Mexico’s gassy slice of the Permian and the eastern part of Wyoming.
Figure 2 – American Energy Partners-Woodford wells in central Oklahoma, sized by first 6 month cumulative oil, and colored by production type (orange is oil, blue is gas) (Source DI Production Workspace)
In this figure we see American Energy Partners-Woodford wells clustered between Cushing and Stillwater. Contrary to a lot of both Chesapeake and AEP’s focus these wells are primarily oil, and with the proximity to Cushing, they couldn’t really be closer to market.
Oklahoma Injection Wells
On March 7, The Oklahoma Corporation Commission handed down a Regional Earthquake Response Plan for much of Central Oklahoma with a planned reduction of more than 300,000 barrels a day from 2015 injection volume.
Figure 3 – Source Oklahoma Corporation Commission
Figure 3 shows us that although portions of the STACK and SCOOP are less effected by the proposed reduction, AEP’s previously discussed Payne County operations (around Cushing) along with a half dozen other counties to the northeast of Oklahoma City have been added alongside the previously restricted “Western Region” along the Kansas border.
Keeping the Area of Interest from the OCC above in mind, let’s take a quick look at the portions of the STACK that Newfield has been focusing on:
Figure 4 – Source OK Energy Today
From this we can see that although the prime acreage of the STACK is within the OCC’s AOI, it mostly lies outside of the central reduction zone, and if there are Arbuckle Wells, they haven’t been shown on this map. One can speculate that the water cut from the often-targeted Meremec Formation is low enough that it’s of markedly less concern – in fact Felix Energy recently claimed that they had no produced water from STACK operations.
Figure 5 – Well Count for Canadian, Kingfisher and Blaine Counties by operator, Source (DI Analytics)
In Figure 5 we see total well counts for the big 3 counties within the STACK. The three largest Operators are Devon, Cimarex and Linn. Frankly all of these operators would be greatly augmented by acquiring The Chesapeake holdings since they all have infrastructure and knowledge of the geology on their side.
While current low natural gas prices will likely limit E&P opportunities to build upon Aubrey McClendon’s tremendous legacy, the prospect of an oil price rebound bodes well for many Oklahoma plays. The expansion of storage capacity in Cushing, as well as the new ability to export domestic U.S. crude to foreign markets from Cushing, meaning that Oklahoma’s central location, favorable geology, and business leadership guarantees that Oklahoma is ok.
What do you think? Leave a comment below.
I found last week’s excellent blog post by Silas on Decline in Leasing Activity not as Steep as Permits, Rigs to be very thought provoking. One thing that caught my eye that he didn’t explore was that leasing activity in Oklahoma appears to be on par with some of the other big plays. Since the lion’s share of “news” coming out of Oklahoma lately is focused on Harold “Cowboyistan” Hamm browbeating some professors, or the “Fracking Cowboy” Aubrey McClendon’s business arrangements, I thought I would take a little time and explore operator activity in Oklahoma.
Oklahoma Oil and Gas Leasing
If we focus into Oklahoma on the 30-day leasing map from Silas’s post last week we see that leasing activity generally in the state has a warm line of activity creating a backwards S shape through the Woodford Shale and then back to the west in the Granite Wash play area.
Figure 1: 30 day leasing activity heat map
It’s pretty easy to agree with his assumptions that the money for this activity is coming from well- hedged companies, companies with cash to grow their HBP portfolio, or new players.
Oklahoma Oil and Gas Permitting
I really like the heat of the above map in the neighborhood of Grady, McClain, Garvin and Stephens Counties – The SCOOP – so let’s take a closer look at permitting there. Over the past six months in those four counties, fourteen different operators have been pulling between 4 and 10 permits a week.
Figure 2: permits by operator per week in Grady, McClain, Garvin and Stephens Counties – Left early 2014; Right late 2014 and early 2015
Compared to the 12 operators in the same four counties a year ago, the permitting activity is about the same.
Let’s do the same comparison vs. Ellis, Dewey, Roger Mills, Custer and Washita Counties in the Granite Wash.
Figure 3: permits by operator per week in Ellis, Dewey, Roger Mills, Custer and Washita Counties – Left early 2014; Right late 2014 and early 2015
20 different operators pulling between 4 and 14 permits a week, vs a year previous, where we had 25 operators being a bit more active. So a visible drop in permitting activity in the Oklahoma Granite Wash.
Oklahoma Oil and Gas Rig Activity
Looking at Rig Activity within the Woodford, Mississippi Lime, and Granite Wash plays in Oklahoma, we see the fairly steep decline typical of US onshore during the recent slump.
Figure 4: Active Rigs per play in Oklahoma
If we take a look at movement within the 3 plays for the last 3 months (2-25-15—5-29-15) vs. the previous 3 months (11-25-14—2-25-15), we see the clustering remains about the same, although the activity is visibly lighter.
Figure 5: Rig Movement in the Woodford, Mississippi Lime, and Granite Wash plays, most recent three months (below), previous 3 months above
In spite of the “newsworthiness” of a few of the heads of Oklahoma-based E&Ps, Oklahoma drilling itself appears to be strong, albeit lighter in accordance with current market conditions. Oklahoma operators will certainly be well-positioned in the event of a rebound.
What do you think? Leave a comment below.
The Woodford Shale itself is not a new Oklahoma oil and gas play and while some plays begin to lose hype over a few years, there is still quite a bit of emerging play buzz going on, especially in the southern portions.
The Woodford SCOOP, or South Central Oklahoma Oil Province, as coined by Continental Resources a couple of years ago, has grabbed the attention of a handful of large operators.
Continental, the clear leader in the play, plans to spend almost $900 million in 2014 to SCOOP development and exploration – almost double what the company spent in 2013.
What Makes This Play So Attractive?
As most folks already know, the SCOOP is a liquids-rich play, offering high yields of oil and condensate. However, only a few years ago, the Woodford was sought after for its natural gas production, especially in the Arkoma Basin. Here is a map showing the entire Woodford play area broken down into four play regions based on the basin of deposition, GOR, primary product and industry drilling trends. Each well is bubbled and colored by its max month of oil production in barrels per day. This gives a brief, high-level overview of the Woodford’s sweet spot areas and shows the variation in the Woodford’s hydrocarbon thermal maturity.
What’s Going on in the SCOOP?
With that better idea of the Woodford as a whole, I queried up some data and looked for trends or standout data points that make the SCOOP play area special. I used the customized, DI Analytics dataset for my observations. Some of the power users of these datasets call them “analytics ready” and allow for faster workflows and quicker data to answers interpretation.
I want to look at similar plays to make sure I’m not comparing apples and oranges here, so I decided to hone in on the Bakken and Eagle Ford Oil Window since these plays compare favorably in terms of the product produced and GOR. Right off the bat, what stood out was short-term cumulative production levels of Woodford SCOOP wells compared to these other two plays. Observe the table below:
The major points of interest here are the lower initial decline rates, which account for the first 12 months of the well’s production. This is indeed an attractive attribute of the play considering typical shale wells decline 55 %– 70%, roughly, within the first year of production.
Through the Looking Glass
While this hardly comes close to solving the “Red Queen” conundrum of needing to produce more and more just to keep up with rising demand, it does allow a minute to stop and reflect. The ability for a well to produce at strong levels long-term with favorable rates of return in the 45- 55% range (assuming $3.50/Mcf, $90/bbl and $9 MM completed well costs) is nothing to scoff at. You could expect even better economics as the play matures and well costs decline.
What Else Should We Know?
In 2010, the USGS assessed there to be about 16 Tcf of dry gas, 400 MMbbls of recoverable oil and about 250 MMbbl of condensate in the SCOOP. While this holds promise and potential, the play area also presents plenty of challenges.
- The Woodford, whether it is Ardmore or Anadarko Basin, lies at a depth deeper than most other unconventional resource plays. This accounts for higher well costs usually in the range of $8-$10 million, with extended laterals even more costly around $13 million.
- There is also the complex geological structure and mineralogy of the Woodford adding to the equation, a topic worthy of its own blog post.
These are just a couple of possible reasons why the SCOOP hasn’t attracted more operators to the play. Nevertheless, this is always an interesting phase of play development when operators have staked out their position, drilled a few wells, and started applying techniques and expertise gained from other unconventional resource plays to evaluate what works for well productivity. It will be fascinating to see further development unfold in the months ahead.
What do you think? Why do you think the lower initial decline rates are so much better in the SCOOP? Is it too late for other operators to get in the play? Please leave a comment below.
The Woodford Shale is back in the spotlight once again. At this week’s Continental Resources investor day, Continental was pleased to announce their Anadarko Woodford discovery, which the company has coined as “SCOOP.” The play, which is similar to the Bakken, Marcellus, and Eagle Ford shales, could add 1.8 billion boe to Continental’s reserves in the next few years. The company has a commanding leasehold position in the liquids-rich play with a little more than 170,000 net acres and 2,200 net locations based on 80 acre spacing. Of that acreage 23% is HBP and 80% of the drilling has been done in the past 18 months. The play provides favorable economics with 40 to 55% rate of return based on $3.50 gas and $90 oil. So far, Continental has drilled or participated in 35 wells to date and over 600 square miles have been de-risked.
In order to show the geographic location and some of Continental’s activity in the SCOOP, I’ve plugged some information into Drillinginfo and displayed it on the maps below.
SCOOP wells cost about $8.5 to $9 million to complete at the moment. The condensate wells cost around $9 to $9.5 million. Continental is expecting those well costs to come down as more Bakken strategies are applied to the SCOOP. The company has drilled its first extended lateral and plans for even more in 2013.
The Woodford hasn’t seen this kind of action in a while. So I’m excited about this discovery. I plan to take a deeper look into the geology of this area of the Woodford so stay tuned to the Unconventional Reservoir Blogs for that. Also, feel free to check out other activity in the play by visiting the Woodford Folder in the Drillinginfo DNA section.
First quarter earnings announcements are wrapping up and results are looking good in the Woodford…..Cana Woodford that is. The Arkoma Woodford has seen a drawback in drilling activity like many other shale gas plays. Some key operators in the region like Continental and Newfield plan to completely suspend drilling in the Arkoma throughout 2012. And it’s a Monday, so I’m going to try to keep this on a positive note and focus on the Cana and the liquids.
Continental Resources, a leader in the play with 280,610 net acres in the Anadarko Woodford Basin, reported 12,826 Boepd. This equates to almost 5 times the amount of production from the first quarter a year ago. Continental currently has 10 rigs operating in the play, where they plan to drill longer laterals and are presently completing a second multiple-unit well. The company has suspended all drilling in the Arkoma Woodford, where they have 36,729 net acres.
Devon Energy has 244,000 net acres in the Cana Woodford and 16 rigs. Production here averaged a record 271 MMcfe/d in the first quarter. Liquids production averaged 13,000 barrels/day, which is an 80% year over year increase. The company recently drilled a 10,000 foot lateral and plans to begin a 20 stage completion later this year.
Newfield Exploration has a 125,000 net acre lease position and is operating 5 rigs in the play. There is a possibility to add a couple more rigs later this year. Newfield plans to give a more detailed report on Cana Woodford results mid-year.
Cimarex Energy has 120,000 net acres in the Cana Woodford. The company plans to operate 10 rigs and begin infill development in the core area later this May. In the core region Cimarex is reporting 6.5 to 8.5 Bcfe EURs with $8 million well costs. First quarter 2012 production was 161 MMcfe/d in the play, which is a 56% increase over the first quarter last year.
Here’s a map showing some other operators in the core liquids are of the Woodford.
Feel free to check out more operator activity and news in the DNA section of Drilling Info.