Chesapeake Energy CHK - Granite Wash (western Oklahoma and Texas Panhandle): Chesapeake is the
largest leasehold owner and producer and the most active driller with approximately 200,000 net acres, an increase of 5,000
net acres from the 2010 first quarter, in the unconventional liquids-rich Granite Wash plays in the Anadarko Basin, which
include the Oklahoma Colony and the Texas Panhandle Granite Wash plays. On its Granite Wash leasehold, Chesapeake estimates
it has approximately 200 million barrels of oil equivalent (mmboe) (1.2 tcfe) of proved reserves (based on the 10-year average
NYMEX strip prices at June 30, 2010) and 900 mmboe (5.4 tcfe) of risked unproved resources.
the 2010 second quarter, Chesapeake’s average daily net production of 260 mmcfe (43 thousand barrels of oil equivalent
(mboe)) in the Greater Granite Wash play increased approximately 5% over the 2010 first quarter and 80% over the 2009 second
quarter. Chesapeake anticipates operating an average of approximately 12 rigs in the Granite Wash in 2010 to drill approximately
75 net wells. Due in large part to the play’s high oil and natural gas liquids content, the Granite Wash is currently
Chesapeake’s highest rate-of-return play and serves as an example of how the company is implementing a transition to
increased drilling activity and production to liquids-rich plays. Chesapeake increased its drilling activity in the
Granite Wash from an average of eight operated rigs in 2009 to 14 operated rigs currently and an average of 16 operated rigs
projected for 2011.
Three notable recent wells completed by Chesapeake in the Colony Granite
Wash are as follows:
- The James 1-33H in Washita County, OK achieved a peak 24-hour rate
of 10.0 mmcf and 2,490 bbls per day, or 24.9 mmcfe per day;
- The Huls USA 1-13H in Washita County,
OK achieved a peak 24-hour rate of 13.3 mmcf and 1,780 bbls per day, or 24.0 mmcfe per day; and
Gwendolyn 2-22H in Washita County, OK achieved a peak 24-hour rate of 8.0 mmcf and 1,980 bbls per day, or 19.9 mmcfe per day.
Three notable recent wells completed by Chesapeake in the Texas Panhandle Granite Wash
are as follows:
- The Ruby Lee 104H in Wheeler County, TX achieved a peak 24-hour rate of
25.3 mmcf and 2,920 bbls per day, or 42.8 mmcfe per day;
- The Dowell 1-31H in Roger Mills County,
OK achieved a peak 24-hour rate of 16.2 mmcf and 2,440 bbls per day, or 30.6 mmcfe per day; and
Zybach 2010H in Wheeler County, TX achieved a peak 24-hour rate of 8.0 mmcf and 1,270 bbls per day, or 15.6 mmcfe per day.
July 2011 Update - Granite Wash, discovered by Chesapeake in 2007. Current gross operated production
is 420 million cubic feet of gas per day, the most by far in the play.
Apache Corp APA - Apache (APA) Granite Wash & Wittenburg Basin plays - I'll move on now to the central region of Oklahoma to Texas Panhandle.
We will more than double our position at the Anadarko wash play fairway to more than 1 million acres or 487,000 net acres
through the Cordillera acquisition announced last month. Together, Apache and Cordillera are currently running 17 rigs in
the region and will assume operatorship of Cordillera's rigs when the deal closes, which is expected in the second quarter.
By closing, we expect to have up to 25 rigs operating on the combined properties. We plan to drill up to 160 wells in the
Cordillera acreage alone, principally in the liquids-rich Granite Wash and the Tonkawa and Cleveland oil plays. As a result,
in 2012 we expect to increase our annual production from this region by nearly 50% on our continuing operations. This excludes
East Texas, which has been divested and represents about 6,000 barrels of oil equivalent per day in 2011.
in the news release this morning, we also added 96,000 acres to our position in the Bivins Ranch area. Our initial exploratory
results in the emerging Wittenburg Basin play had been very encouraging, with 3D 30-day production ranging from 107 barrels
of oil and 42 Mcf of natural gas per day to more than 1,000 barrels of oil and 800 Mcf of gas per day. We completed a 240
square mile 3D shoot on the property during 2011, which we're using to further de-risk in the 5 future drilling locations.
Our breadth and scale across these plays allows us to generate efficiencies to increase the value of our position. In the
Granite Wash alone, we've been able to reduce costs $500,000 per well by optimizing our casing design, reducing pump volumes
and changing profit type. Across the region, we've implemented a fracture database to allow us to reduce frac size and reduce
costs by more than 25%. We will continue to pursue these kinds of improvements as we simulate Cordillera assets into Apache.
Update - With the recently completed acquisition of Cordillera Energy Partners III, Apache more than doubled its position in the
Anadarko wash play to nearly 550,000 acres. The company has increased its exposure to the horizontal Granite Wash, Tonkawa,
Cleveland and Marmaton gas condensate and oil plays. Rig count has increased from six at
the beginning of the year to the current total of 22 of which 21 are horizontal.
Devon Energy DVN - Devon Energy (DVN) Granite Wash Field - Devon brought seven operated Granite Wash wells online in the first quarter. Initial
production from these wells averaged 1,650 Boe per day. The company has an average working interest of 73 percent in these
Range Resources RRC - During the second quarter, the Midcontinent Division focused on the Texas Panhandle Granite Wash and the northern Oklahoma
shallow oil plays. Two vertical Granite Wash wells commenced sales during the quarter at combined rates of 4.4 (3.5 net) Mmcfe
per day. One additional well is completing with three more scheduled in the play for 2010. In the northern Oklahoma shallow
oil play, one horizontal well was placed on production at a rate of 295 (236 net) BOE per day. This well reached only one-half
of its projected lateral length, yet has responded with more than 50% of the production volumes associated with the first
horizontal test. A second well is currently completing, with three additional wells planned for the remainder of the year.
Linn Energy LINE - LINN Energy LINE Granite Wash Update - Texas Panhandle-Granite Wash - LINN continues to deliver
strong results from the Granite Wash, where the company is focused on developing high-return, liquids-rich opportunities.
In the first quarter, the company had nine operated rigs drilling in the area and completed 14 operated wells. The company
currently has 93 operated horizontal wells producing and 16 operated wells drilling, completing or awaiting completion. LINN
also owns working interest in 32 non-operated horizontal producing wells with three additional non-operated wells in progress.
The company's net horizontal Granite Wash production during the first quarter averaged approximately 137 MMcfe/d.
the first quarter, LINN drilled its first three operated horizontal Hogshooter wells. These wells were completed in April
and are in the early flow-back period. LINN's first well had an initial production rate of 2,454 Bbls/d of oil and 3 MMcf/d
of liquids-rich natural gas. The second well had an initial rate of 2,891 Bbls/d of oil 4.4 MMcf/d of liquids-rich natural
gas. The third well had an initial rate of 2,125 Bbls/d of oil and 3.4 MMcf/d of liquids-rich natural gas.
team has mapped the Hogshooter interval across the company's acreage in the vicinity of the first three wells. Based on this
technical work, the company believes there are approximately 50 additional locations in this area, and LINN owns substantial
additional acreage in both Texas and Oklahoma that will be evaluated for Hogshooter potential. LINN is also evaluating other
shallow oil-bearing intervals in the Texas Panhandle such as the Lansing, Cleveland and Tonkawa. LINN believes its inventory
of shallow oil opportunities will increase in this area. Given the results LINN has experienced to date from the Hogshooter
wells, the company plans to shift a portion of capital from the traditional Granite Wash drilling program to focus on the
Hogshooter zone. LINN anticipates drilling 12 additional Hogshooter wells in the second half of this year.
the company plans to allocate more than 50 percent of its capital spending to the Granite Wash to drill approximately 65 operated
horizontal wells and anticipates the program will generate rates of return in excess of 50 percent. The company also plans
to participate in 16 non-operated horizontal wells. In addition, construction is underway on a planned 43-mile extension of
the company's gathering pipeline, compression and associated facilities, which will provide additional takeaway capacity for
Granite Wash production.
Forest Oil FST - Forest Oil (FST) discusses Texas Panhandle - Granite Wash Play -
Forest holds approximately 184,000 gross acres (111,000 net) and is currently running 5 rigs in the Texas Panhandle Area.
Since Forest's last earnings release, the Company completed two horizontal Granite Wash wells (94% working interest) that
had an average 24-hour initial production rate of 13 MMcfe/d, including approximately 1,400 Bbls/d of oil and natural gas
liquids or 64% of total equivalent production.
Additionally, the Company completed one Missourian Wash well (100% working
interest) that had a 24-hour initial production rate of 650 Boe/d. This well was completed with a shorter lateral, testing
the areal extent of the Missourian Wash interval.
Forest completed its first Tonkawa well during the first quarter
of 2012. The Tonkawa well (89% working interest) had a 24-hour initial production rate of 1,640 Bbls/d of oil, 200 Bbls/d
of natural gas liquids, and 1.6 MMcf/d of natural gas, for a total equivalent rate of 2,100 Boe/d. Forest has initially identified
63 Tonkawa potential locations, with additional acreage being reviewed for prospectivity.
The Company experienced production
curtailments in the Texas Panhandle Area related to a downstream NGL plant outage and to third party compression issues, which
together resulted in a reduction of net sales volumes of approximately 9 MMcfe/d during the quarter. The plant outage was
due to a NGL storage facility leak at the Oneok Medford plant, which resulted in a reduction of Forest’s net quarterly
sales volumes of approximately 6 MMcfe/d. The production curtailment associated with the plant outage has been fully restored.
An additional 3 MMcfe/d of the curtailment was associated with third-party high line pressure issues. In order to reduce this
curtailment, Forest has installed loop lines, compression, and has transitioned a portion of its production in this area to
a new gas gatherer.
SM Energy SM - SM Energy currently has three operated drilling rigs in its Granite Wash program, which are focused on the shallower,
more liquid rich washes. The Company has allocated between $60 million and $70 million for its 2012 operated program in the
Penn Virginia PVA - Penn Virginia (PVA) Granite Wash – ( Chesapeake
Energy CHK Partner ) - During the fourth quarter of 2011, one (0.5 net) non-operated Granite Wash well was drilled in
the Mid-Continent. Our full-year 2012 guidance includes up to seven (2.3 net) new Granite Wash wells. In addition, during
the first half of 2012, we plan to drill one (0.5 net) horizontal well to test the Viola Limestone, which is an oil prospect.
Cimarex Energy XEC - Cimarex Energy (XEC) Granite Wash Update - Other first-quarter 2011 Mid-Continent drilling included 5 gross (2.8 net) Granite
Wash wells. Recent notable 30-day average production from these wells include the George 17-5H (61% working interest) at 8.6
MMcfe/d, George 17-6H (61% working interest) at 8.0 MMcfe/d and the Kephart 1-4H (91% working interest) at 6.5 MMcfe/d.
Newfield Exploration NFX - Granite Wash – Production in the Granite Wash in early 2012 reached a record high of 215 MMcfe/d gross,
or 143 MMcfe/d net. The higher than anticipated production was driven by well performance and the completion of wells drilled
in 2011 and deferred into 2012. The Company does not expect to drill any additional dry gas wells in the Granite Wash play
Plains Exploration & Production PXP - Plains Exploration PXP Granite Wash Update - In the Texas Panhandle
asset area, PXP has 5 drilling rigs operating in the Granite Wash trend and expects to continue this level of activity
through 2011. Second-quarter daily sales volumes averaged approximately 13,620 BOE per day net to PXP, or 52% higher than
first-quarter 2011 and 139% higher than the second-quarter 2010. Average daily sales volumes are expected to increase to approximately
17,000 BOE net per day by year-end 2011. During 2010 and early 2011, PXP built 15 production handling facilities and related
infrastructure in order to support the rapid growth in sales volumes that PXP is now reporting.
Unit Corp UNT - Unit Corp (UNT) Granite Wash Update - In the Granite Wash (GW) play located in the Texas Panhandle, Unit had first sales
on five horizontal wells during the third quarter. Unit’s average working interest in these wells is 79%. Of the five
new wells, one well was completed in the GW “A”, three in the GW “B”, and one in the GW “C1”
zone. The average 30-day rate for these five wells was 7.2 MMcfe per day. For the first nine months of 2011, Unit had first
sales on a total of 14 new GW horizontal wells with an average 30-day production rate of 6.5 MMcfe per day consisting of 15%
oil, 36% NGLs and 49% natural gas. The average ultimate recovery for a GW horizontal well is estimated at 4.1 Bcfe with an
average cost per well of $5.5 million. Unit anticipates operating three to four Unit drilling rigs in the Granite Wash during
the remainder of 2011, which should result in a total of 19 operated GW wells during the year at a projected net cost of $85
Cabot Oil & Gas (COG) - Cabot Oil & Gas is drilling just north of the Granite Wash in Beaver County, OK. This area is called the Marmaton
Shale - Last quarter Cabot announced its initial success in the Marmaton Shale. Since then, Cabot has participated as a non-operator
in seven Marmaton wells in Beaver County, Oklahoma. The Company's working interest varies
from two to 37.5 percent in the non-operated wells. Thus far, the best performing wells have experienced peak 24-hour rates
of 1,338, 792 and 589 Boepd respectively, with one of these most recent wells having a 10-day average of 1,056 Boepd. Overall
the wells consistently were drilled and completed for less than $3 million per well. "Clearly,
this productivity encourages us to allocate capital here for our 2012 plans," said Dinges. "Presently, we are moving
an operated rig to the area in anticipation of having one rig there for 2012, in addition to one in the Eagle Ford
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