Chesapeake Energy CHK - Permian Basin Unconventional Liquids Plays (West Texas and southern New Mexico): Chesapeake
has built a strong position of approximately 670,000 net acres of leasehold in four Permian Basin unconventional liquids plays:
the Avalon Shale, Bone Spring, Wolfcamp and Spraberry in West Texas and in southern New Mexico. The company has drilled
and completed 100 gross wells to date in these four plays. Chesapeake anticipates operating an average of approximately
five rigs in its Permian Basin unconventional liquids plays in 2010 to drill approximately 60 net wells. In 2011 and
2012, the company plans to increase its operated rig count as it continues its transition away from natural gas drilling to
more liquids-rich drilling.
Pioneer Resources is well positioned in the Permian Basin. When it comes to solid foundation assets, Pioneer's West Texas Spraberry field,
with its long-lived oil and gas reserves, stable production and low maintenance capital cost, consistently delivers steady
production growth. Covering nine West Texas counties, the Spraberry field produces sweet crude and gas from formations between
6,700 and 10,000 feet deep. Spraberry is the 5th largest oil field - the only large oil field in the country that is growing
- and the 15th largest gas field in the U.S.
Pioneer is the largest acreage holder, driller and producer in the field, with interests in more than 5,600 active
wells. We have set the standard for best practices in drilling, completions and operations in the area. We also benefit from
processing our own gas through the Midkiff/Benedum gas processing system in which we hold a 27% interest. This resource play
covers more than 11,000 square miles, with ever-expanding field boundaries, and we continually pursue opportunities to increase
our working interest and acreage position through bolt-on acquisitions. Pioneer is also actively progressing initiatives to
capture additional resource potential, including ongoing 40-acre field development, ongoing 20-acre downspacing,
horizontal drilling potential deeper zones, evaluating potential from shale/silt intervals and implementing enhanced oil recovery
through a 7,000-acre waterflood project.
Companies Drilling in the Permian
Basin Oil Field - Texas & New Mexico - Permian Basin Stocks
Exxon Mobil (XOM) - Exxon Mobil (XOM) has been busy buying up mineral rights in the Permian Basin - In
the Permian, where we hold approximately 800,000 net acres of leasehold, we are also evaluating unconventional potential that
occurs across roughly half of this acreage. 2012 Update - In the Permian Basin of West Texas, we have 5 operated rigs which are developing conventional plays, as well as testing
new liquids-rich unconventional opportunities
Occidental Petroleum OXY - Oxy is the largest oil producer in the Permian Basin of Texas and New Mexico, and the leading operator
among more than 1,500 operators in the area. Oxy’s oil production accounts for 20 percent of the Basin’s total
production. Oxy’s Permian acreage spans 3.6 million gross acres (2.2 million net acres) and includes a deep inventory
of more than 2,000 drilling locations.
Sixty percent of Oxy’s Permian Basin oil production
utilizes CO2 (carbon dioxide) floods, a tertiary enhanced oil recovery (EOR) technique that facilitates production
of hard-to-reach oil through the injection of CO2. The balance of Oxy’s Permian production utilizes secondary
water flooding techniques (30 percent) and primary means of production (10 percent). The company maintains a significant inventory
of CO2 flood opportunities.
Of the estimated 11.9 billion barrels net of oil initially
in place in Oxy-operated CO2 flood projects, 4.1 billion barrels have been produced, with 7.8 billion barrels net
remaining. Of the 7.8 billion barrels of net remaining oil, Oxy expects to produce a total of between 1 and 3 billion net
barrels of enhanced recovery reserves at attractive margins from the CO2 floods it operates in the Permian.
A limited supply of carbon dioxide has impacted Oxy’s Permian area oil production and constrained new projects.
Addressing the challenge of producing the next billion barrels from Oxy’s current estimated Permian Basin property reserves,
Oxy plans to accelerate development of its current Permian projects through short-term CO2 purchase opportunities;
CO2 produced by Oxy, obtained by drilling more wells; and additional CO2 supplies from methane/CO2
Oxy has identified more than 6.2 trillion cubic feet (TCF) of CO2 available
for its program. In addition, construction is under way at the Century Plant in Pecos County, Texas, to process high-CO2
gas. The plant is expected to begin initial operation in late 2010 and will further increase Oxy’s CO2 supply
while providing methane for the marketplace.
Oxy’s total Permian Basin production is expected
to grow from 180,000 BOEPD in 2010 to between 220,000 and 230,000 BOEPD in 2014, entirely from currently owned properties.
May 2011 Update - Of the 16 rigs that we have currently running in the Permian,
right now 6 of those are drilling Wolfberry wells, which as you know is that interval between the Spraberry and the Wolfcamp.
So we've got nearly 50% of our Permian development
program designated to drill Wolfberry wells.
Anadarko Petroleum (APC) - Anadarko Petroleum (APC) drills in the Permian Basin and has some nice
acreage in the Avalon Shale - Average sales volumes for the quarter were 15,600 BOE/d, which represents an increase
of 13% compared to the same period of 2010. The quarter’s sales volumes of liquids increased by more than 180% over
the same period in 2010, and more than 30% sequentially. Anadarko
exited the quarter with four operated rigs and five non-operated rigs drilling in the Bone Spring horizontal play and one
operated rig and one non-operated rig drilling in the Avalon Shale. A total of 15 wells were spud during the quarter and 19
wells were completed.
Devon Energy DVN - In the Permian Basin, Devon Energy (DVN) drills for Oil & Gas. Permian Basin Activity
and Production Growth Lead Operating Highlights
- Devon continued to aggressively ramp-up
activity in the Permian Basin in the first quarter. Since year-end the company has added five operated rigs and now has 21
rigs running in the basin.
- Permian Basin oil production increased 32 percent over the first-quarter
2011. Liquids production accounted for 76 percent of the 56,000 Boe per day produced in the Permian Basin during the first
- Additionally, Devon recently enhanced its leasehold position in the Permian Basin
by assembling a 500,000 net acre position in the Cline Shale light-oil play. The company is currently drilling its first horizontal
well in the Cline and expects to drill 15 wells in 2012.
- Also in the Permian, Devon completed
16 operated Bone Spring wells in the first quarter. Initial daily production averaged 580 Boe per day per well.
ConocoPhillips (COP) - ConocoPhillips (COP) give a Permian Basin Update - In the Permian, in the Bakken, we are running a total of 12 --
10 rigs and expect to increase this by as much as 50% during 2012. The fourth quarter production at the Permian and Bakken
averaged 50,000 BOE per day and 18,000 BOE per day, respectively. The Permian activities are focused around the Avalon, the
Wolfberry and the Wolfcamp, and we're using both horizontal and vertical drilling techniques there.
PetroHawk Energy (HK) - Petrohawk Energy (HK) Expands to the Permian Basin - Petrohawk is currently operating four rigs in
the Permian region, all concentrated in the Delaware Basin where the majority of the Company's
leasehold is located. An initial vertical well in Culberson County, Texas tested approximately
1.0 Mmcf/d of 1250 BTU gas from the Wolfcamp formation. Total depth was reached on the Company's first horizontal Bone Springs
well in Reeves County, Texas. A completion date for this well has been set for early August.
A commingled Wolfcamp and Bone Springs vertical completion in Reeves County is planned with
a completion date expected in mid-August. The Company is also currently drilling the lateral portion of its first horizontal
Wolfcamp well in Culberson County with a planned completion date of mid-August. In addition,
the Company is undertaking necessary infrastructure construction in order to market all products with minimum delays as wells
Petrohawk Energy Corporation is an independent energy company engaged in the acquisition, production, exploration
and development of oil and natural gas with properties concentrated in North Louisiana, in
the Haynesville Shale; South Texas, in the Eagle Ford Shale; and West Texas, in the Delaware and Midland Basins.
EOG Resources EOG - EOG Resources (EOG) is focusing on the Wolfcamp Shale portion of the Permian Basin - In the West Texas Permian Basin,
EOG increased drilling activity in the Wolfcamp formation during the second half of 2011 in preparation for a more active
year in 2012. EOG reported success from the upper Wolfcamp zone. The University 9 #2803H in Reagan County, 25 miles west of
its current middle Wolfcamp activity began production at 883 Bopd with 68 Bpd of NGLs and 388 Mcfd of natural gas. EOG has
a 100 percent working interest in the well. In Irion County, the University 43 #0902H and 40A #0402H were completed in the
middle Wolfcamp zone at initial oil rates of 1,088 and 1,076 Bopd, respectively. In addition to the strong oil production,
the wells were turned to sales with 86 and 129 Bpd of NGLs and 489 and 736 Mcfd of natural gas, respectively. EOG has 90 and
85 percent working interest in the wells, respectively. On the border between Irion and Crockett counties, the University
40 #1309H and 38 #0601H began production at 1,738 and 1,077 Bopd with 137 and 119 Bpd of NGLs and 779 and 678 Mcfd of natural
gas, respectively. EOG has 88 percent working interest in these wells. EOG plans to operate a four-rig drilling program in
the Wolfcamp during 2012.
In the New Mexico Leonard Shale, EOG reported drilling success from Lea County with
the Caballo 23 Fed #4H and #6H. The wells, in which EOG has 86 percent working interest, initially produced at 932 and 750
Bopd with 116 and 99 Bpd of NGLs and 636 and 545 Mcfd of natural gas, respectively. During 2012, EOG is positioned to increase
its drilling activity in the Leonard Shale with a year-long two-rig program.
Energen (EGN) - Energen is active in all part of the Permian Basin - Energen Resources' 3rd Bone Spring
program continued to generate improved well performance in 2012, particularly now that the company has focused its operations
on its core acreage east of the Pecos River in Ward, Winkler, and Loving counties in west Texas. The company's 3rd
Bone Spring drilling programs in 2012 and 2013 will be concentrated in this core area.
also is adding 4 net wells to its 2012 drilling schedule; this brings the total number of wells to be drilled in the horizontal
3rd Bone Spring play in the Delaware Basin to 47 gross (43 net) wells. During the first quarter, Energen Resources
drilled 11 gross (10 net) wells. The company plans to continue running 5-7 rigs in the Delaware Basin in 2012.
Energen tested 7 gross (6.5 net) 3rd Bone Spring wells in the first three months of 2012. The initial
stabilized rates of the wells ranged from 514 barrel of oil equivalents per day (61% oil) to 1,737 BOE per day (76% oil),
with an average of 1,004 BOE/day (73% oil). At 1,737 BOE/day, this Ward County well has become the company's top initial performer;
the well was tested on a 16/64" choke at a pressure of 4,400 PSI. Initial stabilized rates reflect consistent flow rates
after clean-up of stimulation fluid. The five first quarter wells with sufficient production history had a 30-day average
(gross) production rate of 783 BOE/day (72% oil).
To better reflect the gross reserve potential
of 3rd Bone Spring wells to be drilled in this core area east of the Pecos River over the next several years, Energen
has adjusted the estimated ultimate recovery (EUR) to an average 475,000 BOE per well; the company's net revenue interest
is 75 percent. The estimated product mix is 66 percent oil, 18 percent NGL, and 16 percent dry gas.
$100 per barrel of oil and $4 per Mcf of natural gas, Energen estimates that its 3rd Bone Spring program over the
next several years will generate a 72 percent before-tax rate of return. A post-plant type curve and cumulative production
curve for the wells currently scheduled to be drilled in 2012-14 is available on the company's Website: http://www.energen.com.
Additionally, the company expects to realize cost savings for the remainder
of 2012 associated with continued stimulation optimization and a water recycling program. The company's targeted cost to drill
and complete a well in the 3rd Bone Spring play for the remainder of 2012 is $6.9 million. This drill and complete
cost reflects 4,400-foot lateral lengths and 10-11 frac stages.
Energen Resources has approximately
85,000 net acres in the Delaware Basin thought to be prospective for the 3rd Bone Spring sand; 70,500 of those
acres remain undeveloped. On the east side of the Pecos River, the company's net acreage position is 33,000, with 17,300 undeveloped.
Based on the high likelihood of 160-acre spacing, Energen Resources estimates that it has 92 potential locations remaining
to be drilled.
Vertical Wolfberry Wells in Midland Basin Performing
Energen Resources' vertical Wolfberry program in the Midland
Basin continues to perform to expectations. In 2012, the company plans to drill 177 gross (170 net) wells in this developmental
play as it closely monitors the potential for horizontal Wolfcamp and Cline on its acreage position. During the first quarter,
Energen Resources drilled 33 gross (32 net) wells. The company plans to continue running 7-8 rigs in the Midland Basin in
Energen tested 51 gross (50 net) Wolfberry wells in the first three months of 2012. The
initial stabilized rates of the wells averaged 88 BOE/day (73% oil) and 30-day average (gross) production rates of 73 BOE/day
Wolfberry average EURs are 155,000 BOE per well; the company's net revenue interest
is 75 percent. The estimated product mix is 61 percent oil, 23 percent NGL, and 16 percent dry gas. At $100 per barrel of
oil and $4 per Mcf of natural gas, Energen estimates that its vertical Wolfberry program over the next several years will
generate a 33 percent before-tax rate of return. A post-plant type curve for the wells currently scheduled to be drilled in
2012-14 as well as a cumulative production curve is available on the company's Website: http://www.energen.com.
Pioneer Nautral Resources PXD - Pioneer Natural Resources (PXD) Permian Basin - In the Spraberry oil field in West
Texas, Pioneer is currently operating 44 rigs, of which 40 are drilling vertical wells (including 15 Company-owned rigs) and
four are drilling horizontal wells. The Company has continued to expand its integrated services to control drilling costs
and support the execution of its drilling program. Five Company-owned fracture stimulation fleets totaling 100,000 horsepower
are currently operating in the Spraberry field supporting vertical drilling operations. An additional 10,000 horsepower will
be added to these five fleets by midyear. The first of two additional fleets (totaling 60,000 horsepower) to support Pioneer’s
horizontal drilling program in the Wolfcamp Shale was recently delivered, with the second fleet scheduled to be delivered
In early April, the Company completed the acquisition of a U.S. industrial sands company (Premier Silica),
which is expected to supply Pioneer’s growing brown sand requirements for fracture stimulating wells in the Spraberry
vertical and horizontal Wolfcamp Shale plays along with the Barnett Shale Combo play. In addition, the Company owns other
oil field service equipment to support its Spraberry operations, including pulling units, fracture stimulation tanks, water
transport trucks, hot oilers, blowout preventers, construction equipment and fishing tools. It has also contracted for tubular
and pumping unit requirements through 2012 and well cementing services through 2016.
In the horizontal Wolfcamp Shale
play, the Company believes it has significant resource potential within its acreage based on its extensive geologic data covering
the Wolfcamp A, B, C and D intervals and its drilling results to date. Pioneer is the largest acreage holder in the play with
more than 400,000 prospective acres.
The Company’s current focus is the Wolfcamp B interval in 200,000 acres
in the southern part of the field to hold expiring acreage. EURs in this area are expected to range from 350 MBOE to 500 MBOE
per well. Current plans call for drilling 90 horizontal wells in this area by the end of 2013, with 30 to 35 horizontal wells
being drilled in 2012. Four horizontal rigs are currently operating, up from one horizontal rig at the beginning of the year.
Pioneer expects to increase to seven rigs by the end of 2012 with a further increase to 10 rigs in early 2013. Well costs
are currently averaging $8 million to $9 million per well, which includes the costs of coring, extra logging and micro seismic.
Once Pioneer switches from drilling these “science” wells to development wells, drilling costs are expected to
range from $6 million to $7 million per well.
Pioneer’s first two successful wells in the play were drilled in
Upton County with 5,800-foot laterals and 30 fracture stimulation stages. Both wells continue to produce above expectations
and flow naturally at rates greater than 215 barrels oil equivalent (BOEPD) and 350 BOEPD, respectively, after being on production
for more than six months and four months, respectively.
Pioneer drilled two wells in southern Reagan County and one
well in southern Upton County during the first quarter. All three wells are testing longer 7,000-foot laterals and additional
fracture stimulation stages. The two wells in southern Reagan County have been fracture stimulated and recently put on production.
They are in the early days of unloading water after being fracture stimulated, with oil production rates increasing daily.
The Company expects to drill 9 horizontal Wolfcamp Shale wells in the second quarter and put two to three additional wells
on production by the end of the quarter.
Apache Corp APA - Apache Corporation (APA) is very active in the Permian Basin - We plan to drill
more than 600 wells in the Permian this year and expect mid-single-digit production growth in 2012, and the true contribution
of this investment will be realized in 2013. We expect to increase our pace of activity overall in the Permian throughout
The Wolfcamp play in the Deadwood area will continue to represent about half of our Permian activity in 2012.
In the past year, we've cut drilling time in half, further enhancing the already attractive economics of this play. During
2012, we're going to be active in just about every play and area of the Permian basin.
I'd like to talk briefly about
a couple of our catalysts in the region. In November, I mentioned the first 2 horizontal wells Apache drilled in lower Cline.
We've now drilled 4 lower-Cline horizontal wells at various locations across our 100,000-acre Deadwood leasehold. These wells
are contributing -- 3 wells are producing in this 5,500-foot lateral, and a fourth is being prepared for fracture stimulation.
Results from the last 2 wells indicate initial production rates of 300 barrels of oil per day and 200 Mcf of gas per day,
with expected EURs of 300,000 barrels of oil equivalent per well. Based on this early success, there are potentially an additional
565 resource locations on our current leases. We anticipate drilling up to 4 lower-Cline horizontals in 2012 and testing 2
additional shales in the Atoka, Barnett and the Wolfcamp formations on this acreage.
In the Southern Midland Basin,
we leased 20,000 acres in the Wolfcamp shale play in Irion County, which brings our total to 25,000 acres. This is in addition
to 31,000 acres in the form of BP leasehold we have in the same area. And during 2012, we plan to drill up to 6 horizontal
wells on these properties. We currently think there's potential for up to 150 locations, horizontal wells in this area.
has built a 30,000-acre position in the Bone Spring and Wolfbone plays in the Delaware basin. We currently estimate up to
130 horizontal locations and 160 vertical locations on our position. In 2012, we plan to drill 2 or 3 wells at both the Bone
Spring and Wolfbone plays in Loving and Pecos County, Texas. We're still determining the size, but each of these opportunities
has the potential resource of drilling backlog for extensive, long-life development. As we drill more wells and collect more
data this year, we'll be able to disclose more about our Permian plays. We plan to conduct a detailed review of our Permian
resource potential at our Analyst Day in midyear.
Update - Permian Basin production rose to 99,000 boe per day in the current quarter as a result of increased drilling and recompletion
activity in liquids-rich plays, representing an 18 percent rise from the first quarter of 2011. Apache currently operates
31 rigs in the region, including six horizontals.
Range Resources RRC - Range Resources (RRC) Permian Basin, Cline Shale Testing - Range's Permian team is targeting the Cline Shale oil play in
West Texas. Our first horizontal well is very encouraging and we have recently drilled a second test on our acreage that is
awaiting completion. Range has 100% working interest in both wells. The first horizontal well had an initial production rate
of 600 Boe per day. The Company estimates that the EUR of the first well is 340 Mboe consisting of 210 thousand barrels of
crude oil, 71 thousand barrels of NGLs and 353 Mmcf of natural gas. In a development mode, Range expects the wells with a
3,000 foot lateral length will cost $4.3 million. Based on strip pricing, the wells are expected to have a 41% rate of return
and a NPV of $3.4 million per well. Range currently has approximately 100,000 net acres in the play with 91,000 net acres
held by production. Range believes that essentially all its acreage is prospective for Cline Shale production and has been
able to determine through well control that the Cline Shale averages 270 - 330 feet of thickness across its acreage position.
April 2012 Update - The Permian team's first vertical Wolfberry well in the Conger field had an initial production rate of 495 (371.3 net)
boe per day (195 barrels per day oil, 141 barrels per day NGLs and 954 mcf per day gas). The 90-day average production rate
for the well was 204 (153.0 net) boe per day (59 barrels per day oil, 83 barrels per day NGLs, and 372 mcf per day gas). The
team has also completed its second vertical Wolfberry well at an initial production rate of 517 (403.3 net) boe per day (212
barrels per day oil, 144 barrels per day NGLs and 969 mcf per day gas). Range has the potential for 100 - 150 additional Wolfberry
locations on 40 acre spacing at Conger. Range plans to drill two more vertical Wolfberry wells in 2012.
Samson Oil & Gas SSN - NEW MEXICO - WESTERN PERMIAN BASIN - State GC Oil and Gas Field - Samson 27% Working Interest
GC oil and gas field is located in Lea County, New Mexico, and includes two producing wells, which produced at an average
gross rate of 50.7 BOPD and 88.2 Mcf/D. This rate is expected to be increased after the Permian Bone Spring Formation interval
in the State GC#2 well is fracture stimulated in the first quarter of the 2011 calendar year.
Linn Energy LINE - LINN Energy LINE Permian Basin Update - Permian Basin Activity Update
LINN continued to expand its acreage
position in the Permian Basin during 2011. The company now has more than 100,000 net acres and operates more than 1,300 wells
in the basin, where net fourth quarter production averaged approximately 13,600 Boe/d compared to 9,500 Boe/d for the fourth
quarter 2010. Net full-year production averaged 12,100 Boe/d, an increase of 137 percent over 5,100 Boe/d for the full-year
LINN owns interest in more than 38,000 net acres in the Permian Wolfberry play, where
the company ran a six-rig drilling program in 2011 to drill 114 operated wells. LINN plans to continue a high activity level
in the Permian in 2012, with net capital of approximately $220 million. Operations will focus primarily on a five-rig program
to drill about 100 Wolfberry wells over the course of the year.
The majority of LINN's Wolfberry
wells include production from the Spraberry, Wolfcamp and Strawn intervals. Many of the wells also test the deeper Atoka and
Fusselman intervals. In addition, LINN is conducting a 20-acre infill pilot program that includes micro-seismic evaluation.
The results of this pilot will serve as a tool to help guide future infill development plans and may double the company's
inventory of Wolfberry drilling locations.
Whiting Petroleum WLL - Whiting Petroleum (WLL) Permian Basin Update 2012 - Delaware Basin: Big Tex Prospect.
Whiting's lease position at Big Tex consists of 118,356 gross (87,599 net) acres, located primarily in Pecos County, Texas.
We are encouraged with our recent well results at Big Tex. We completed our first horizontal Wolfcamp well on March 17, 2012.
The Big Tex North 301H was completed producing 440 BOE per day from the Wolfcamp formation at a vertical depth of approximately
8,660 feet and continues to produce at a rate of over 400 BOE per day as of April 18, 2012. The well's 4,600-foot lateral
was fracture stimulated in a total of 14 stages, all using sliding sleeve technology. Whiting owns a 100% working interest
and a 75% net revenue interest in the new producer, which was drilled in the southeast portion of the prospect.
also completed its first vertical Wolfcamp well. The Stewart 101 flowed 232 BOE per day from the Wolfcamp at a vertical depth
of approximately 12,000 feet on February 20, 2012. Whiting owns a 100% working interest and a 75% net revenue interest in
the well, which was drilled on the southwest side of Big Tex.
We have increased our planned capital spending and drilling
activity to a 17-well drilling program from a 13-well drilling program for Big Tex in 2012. These wells will be a mixture
of vertical Wolfcamp and Wolfbone wells, horizontal Wolfcamp wells and horizontal Bone Spring wells.
Forest Oil (FST) - Forest Oil (FST) Permian Basin Drilling Update - Crockett County, Texas - Wolfcamp Shale Oil Play
Forest holds approximately 126,000 gross acres
(114,500 net) in the Permian Basin, including 68,500 gross acres (63,000 net) in the Delaware Basin prospective for the Wolfbone
oil play and 57,500 gross acres (51,500 net) in the Midland Basin prospective for the Wolfcamp Shale oil play.
Forest's last earnings release, the Company completed two horizontal Wolfcamp Shale oil wells (100% working interest) that
had average 24-hour initial production rates of approximately 200 Boe/d (96% oil). The wells were completed in the lower part
of the Wolfcamp Shale interval. Based on initial well data, Forest intends to target the middle and upper portion of the Wolfcamp
Shale interval in the future development of the play.
After the completion of the Wolfcamp Shale oil wells, Forest
moved the rig to the Delaware Basin to drill its first vertical Wolfbone well, which is currently awaiting completion. The
drilling of a second well has commenced and is scheduled to be completed in the second quarter of 2012.
SM Energy SM - In the Permian Basin, The Company operated
one (1) drilling rig in the Permian region during the first quarter of 2011, which focused on Wolfberry tight oil assets in
Exco Resources XCO - EXCO Resources (XCO) Permian Basin 2012 Update - We drilled and completed 9 gross (8.8 net) wells in our Sugg Ranch
area during the first quarter 2012 with 100% drilling success. We currently are running one operated rig and plan to drill
and complete 36 gross (34.9 net) wells in 2012. Our oil production at Sugg Ranch has increased by 4% to approximately 1,700
net barrels per day in the first quarter of 2012 as compared to the fourth quarter of 2011, and economics for this drilling
activity typically have rates-of-return in excess of 50%. In addition to the oil production, we also produced approximately
1,300 net barrels of natural gas liquids per day and 5.8 net Mmcf of natural gas per day, resulting in a total of approximately
4,000 barrels per day of net oil equivalent production from our Permian operations.
Based on industry results surrounding
our Permian acreage position, we are currently evaluating our shale potential. We are drilling a vertical test well and are
evaluating core samples. Based on those results, we may spud a horizontal test well during the second quarter of 2012.
SandRidge Energy SD - SandRidge Energy SD has acreage in the Permian Basin. The company drilled 182 wells in the Permian Basin
during the first quarter of 2012 and currently holds approximately 225,000 net acres in the play. SandRidge presently operates
12 rigs in the Permian Basin, all of which are operating on the Central Basin Platform drilling primarily Grayburg/San
Andres vertical wells at depths ranging from 4,500 feet to 7,500 feet. The company plans to drill over 750 wells in
the Permian Basin in 2012.
Cimarex Energy XEC - Cimarex Energy (XEC) Permian Basin Update - Cimarex drilled and completed 39 gross (27 net) Permian Basin wells during
the first quarter of 2012, completing 95% as producers. At quarter-end, 12 gross (6 net) wells were awaiting completion. Drilling
principally occurred in the Delaware Basin of Texas and
southeast New Mexico, mainly targeting Bone Spring, Paddock and Wolfcamp formations. First-quarter
2012 Permian production averaged 240.3 MMcfe/d, an increase of 38% over first-quarter 2011, which included 50% growth in oil
volumes to 21,800 barrels per day.
First-quarter New Mexico Bone Spring wells drilled and completed totaled 13 gross (6
net). Per-well 30-day gross production from the 2012 Bone Spring wells averaged 590 barrels equivalent (Boe) per day (87%
oil). Texas Third Bone Spring drilling totaled 5 gross (5 net) wells, which had per-well 30-day average gross production rates
of 800 barrels equivalent per day (82% oil).
Cimarex continues to evaluate multiple shale intervals in the Delaware
Basin, with the majority of the unconventional drilling to date focused on the Wolfcamp. Most of the Wolfcamp drilling has
been in southern Eddy County New Mexico (White City) and northern Culberson County Texas.
In the first-quarter 2012, two Wolfcamp wells were drilled and completed bringing total wells in the play to 20 gross (19
net). First 30-day production, per well has averaged 6.6 MMcfe/d, comprised of 3.1 MMcf/d gas, 250 barrels per day of oil
and 340 barrels per day of NGLs (assuming full NGL recovery), or 47% gas, 23% oil and 30% NGL.
Concho Resources CXO - Concho Resources (CXO) drilling update - Permian Basin - During the first quarter of 2012, the Company drilled
106 wells (85 operated) on its New Mexico Shelf assets, which included both Yeso and Lower Abo wells, with a 100% success
rate on the 48 wells that had been completed by March 31, 2012. Of the 106 wells drilled, 10 were horizontal, which included
8 Yeso wells and 2 Lower Abo wells. In addition, during the first quarter of 2012, the Company completed 48 wells that were
drilled prior to the first quarter of 2012.
During the first quarter of 2012, the Company
drilled 76 wells (71 operated) on its Texas Permian assets with a 100% success rate on the 16 wells that had been completed
by March 31, 2012. Of the 76 wells drilled, we drilled 1 horizontal Cline shale well. In addition, during the first quarter
of 2012, the Company completed 50 wells that were drilled prior to the first quarter of 2012.
During the first quarter of 2012, the Company drilled 28 wells (16 operated) on its Delaware Basin assets with a 100%
success rate on the 2 wells that had been completed by March 31, 2012. Of the 28 wells drilled, 25 wells were horizontal,
which included 15 Bone Spring sand wells, 4 Avalon shale wells, 5 Wolfcamp shale wells and 1 Delaware sands well. In addition,
during the first quarter of 2012, the Company completed 15 wells that were drilled prior to the first quarter of 2012. The
Company's net production in the first quarter of 2012 from horizontal Delaware Basin wells averaged approximately 12,400 barrels
of oil equivalent per day ("Boepd"), an increase of 9% over the fourth quarter of 2011 and a 210% increase over
the first quarter of 2011.
Brigham Exploration (BEXP) - Brigham Exploration BEXP Permian Basin Wolfberry Oil Update - Wolfberry and Vicksburg, what were the latest results there and what do you have going on? Well, in the
Wolfberry, the last few wells, we've only operated
one well, and it came in as expected just over 100 barrels a day. Our operator, Cobra, has two rigs running.
Mariner Energy ME - In second quarter 2010, Mariner drilled 21 development wells and nine extension wells in the Permian Basin,
all of which were successful. The company also drilled three wells on other onshore properties, all of which were successful.
As of June 30, 2010, Mariner has seven rigs working on its Permian Basin properties and one on other onshore properties.
El Paso EP - During the third quarter 2010, El Paso was the winning bidder for leases covering approximately 123,000 acres in Reagan,
Crockett, Upton, and Irion counties in the September 22, 2010 University of Texas lease sale. The leases, when added to approximately
12,000 net acres of existing leasehold nearby, give the company a large position for its newest horizontal oil program, the
Berry Petroleum BRY - Berry Petroleum BRY Permian Basin - "Production from the Permian
was flat during the first quarter at 5,600 BOE/D. The Company entered the year with 800 BOE/D of production shut-in due to
gas curtailment. We completed work during the quarter to install secondary outlets in our key operating areas, which should
reduce curtailments going forward. We drilled 15 gross wells during the first quarter and expect to drill an additional 75
gross wells during the remainder of 2012. The Company acquired an additional 16,000 prospective acres in the Permian, bringing
our total Permian acreage to 58,000 net acres. Plans are to drill four wells on the Company's prospective acreage outside
the Wolfberry fairway during 2012 and evaluate those results by year-end.
QuickSilver Resources (KWK) - United States – Delaware and Midland Basins
approximately 155,000 net acres across the Delaware and Midland basins of West Texas which the company believes is prospective
for oil in the Wolfcamp and Bone Springs formations. The company plans to commence a drilling program early in the second
quarter, and, as previously disclosed, is actively seeking a joint venture partner to facilitate the acceleration to the development
Abraxas Petroleum (AXAS) - Abraxas Petroleum (AXAS) Permian Basin Drilling Update - West Texas - In Nolan County, Texas,
a multi-well oil development program is scheduled to begin in May 2011 on the Spires Ranch. Each of these horizontal wells
will target the Strawn formation at an approximate total measured depth of 9,900 feet, including a 2,600 foot lateral. Abraxas
owns a 100% working interest in each of these wells.
Callon Petroleum (CPE) - Callon Petroleum (CPE) is active in the Permian Basin - Net production from Callon's Permian properties increased 135%
to 965 barrels of oil equivalent per day (Boe/d) in 2011 from 411 Boe/d in 2010. The company drilled 36 gross (33 net) vertical
Wolfberry wells in 2011 and net production from the properties at year-end 2011 was approximately 1,300 Boe/d.
At the Pecan
Acres Field, the two initial wells have been drilled and stimulated, and are currently flowing back in preparation for first
production. In addition, a third well has been drilled, but not yet completed, and a fourth well is currently being drilled.
Callon plans to complete the third and fourth wells in March 2012.
Based upon Callon's ongoing evaluation of its acreage
position in the East Bloxom Field, located in Upton County, TX, and recent industry drilling results in northern Upton County
and western Reagan County, TX, the company plans to commence a horizontal drilling program at its East Bloxom Field targeting
the Wolfcamp B shale during the second quarter of 2012. Callon recently contracted a new-generation drilling rig under a two-year
contract to execute the East Bloxom program.
Additionally, Callon has recently expanded its Permian Basin acreage position
by 150% to 24,009 net acres from 9,539 net acres at December 31, 2011 with the acquisition of 16,020 gross (14,470 net) acres.
The new leasehold is located in the northern portion of the Midland Basin which has had limited drilling activity relative
to recent drilling and evaluation efforts in the southern portion of the basin. Callon has an average 90% working interest
across the contiguous acreage positions and is the operator. The lease bonus payments were funded from existing cash balances.
The company expects to acquire 3-D seismic data in the first half of 2012 and commence drilling to delineate the acreage in
the third quarter of 2012. Callon has performed technical analysis of the newly acquired acreage and believes that the acreage
is prospective for horizontal drilling of the Cline shale and vertical drilling of multiple intervals. Callon is continuing
to pursue additional leasing opportunities in the area.
Comstock Resources (CRK) - Since closing on the acquisition of acreage in Reeves County in West
Texas, Comstock has completed seven operated Wolfbone vertical wells. These wells
were drilled to total depths of 11,477 to 12,170 feet and completed with 5 to 9 frac stages. These wells have an average per
well initial production rate of 347 BOE per day (80% oil). The first three wells averaged 262 BOE per day. Comstock
changed its completion techniques and had improved results with the last four wells which averaged 410 BOE per day, including
the Jessie James 4 #1 well which had an initial production rate of 539 BOE per day. This well is one of the top vertical wells
in the Wolfbone play. Comstock also participated in the completion of three non-operated
Wolfbone wells which averaged 322 BOE per day.
BreitBurn Energy Partners (BBEP) - BreitBurn Energy Partners L.P. (the "Partnership") (NASDAQ:BBEP) today announced it has signed two separate agreements
to acquire oil and natural gas properties located in the Permian Basin in Texas for a combined price of approximately $220
million, subject to customary closing conditions and purchase price adjustments. The acquisitions will be funded with borrowings
under the Partnership's existing bank credit facility and are expected to close within 60 days.
Hal Washburn, BreitBurn's
CEO, said, "We are very pleased to announce two attractive acquisitions that give us entry into the Permian Basin, an
area of strong interest for the Partnership. These acquisitions will expand our geographic presence to seven states, further
increase our exposure to oil, and give us the opportunity to leverage the expertise of a strong operator as we build a local
team. The properties are excellent MLP assets that have significant recoverable oil in place and predictable development drilling
outcomes with over 160 potential drilling locations. We believe the acquisitions will be immediately accretive to distributable
cash flow per unit upon closing."
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