Companies Drilling Bone Spring - Bone Spring Stocks

Companies Drilling in the Bone Spring Oil Field - Bone Spring Stocks

Cimerex Energy XEC - Cimerex Energy is probably the most active production & exploration company in the Bone Spring Oil Field -

In the Bone Spring and of course everybody now is talking about Bone Spring. Bone Spring will encompass a number of our different plays and you will hear me talk over and over about Bone Spring.

Right now, I am talking about a Central Eddy and Lea County play, that is second and third Bone Spring sand. It’s our most active play. We currently have six rigs running in it and we’ve had some very, very nice results.

In Central Eddy and Lea County, as I said it’s a second and third Bone Spring sandstone interval and we’ve brought on some very nice results in the quarter. We just completed our Irwin 13 Federal 1H well.

We had a 100% working interest in that well and its first 30-day average was 1,010 barrels of oil equivalent per day. We’ve brought on the Penny Pincher 21 Federal 1H well. We had 78% working interest in and that well averaged 650 barrels of oil equivalent per day for its first 30-day average.

So that’s a portion of play, where as I said we had six rigs running, very active program for us. We have a multi-year drilling inventory there and we’ll bring on some very, very nice wells.

Further South into Texas down in Ward and Winkler County we have a third Bone Spring sand play. We’ve been active there for years. We continue to drill there and we just brought on our KHC 33-26 2H well with the 96% working interest and that was a 1,050 barrels of oil equivalent per day for its first 30-day average.

In Southern Eddy County and into Texas, we have a number of ideas we’re working on. We’ve talked about them over time. We have a nice land position in Southern Eddy County really moving down from there into Ward and Winkler County and that’s a multi-payer.

We have the first Bone Spring of Avalon Shale and then from there we have other Bone Spring intervals. We have Pennsylvanian-age, Cisco, Canyon, Wolfcamp Shale exposure and we’re in the very early stages of this exciting multi-pay potential area.

Yes, 48,000 net acres. We actually have recent kind of exciting those Bone Spring sands that we are drilling up in Eddy and Lea county where we have our six rigs running, they really do selectively run South to the New Mexico border and Mexico, Texas border and beyond, and one of our geologist who works White City was kind of inspired by the success of the northern Eddy and Lea county, and started mapping the second Bone Spring at White City, and we tested a second Bone Spring sand here a couple of months ago with a re-entry of a well called the ‘Burn Well’. We re-entered a well. It was kind of a slim hole.

We went horizontal and made a nice little oil completion that really proved up, there is a lot of real estate there and the well we ran is on the Western margin, but if you go to Eastern margin of our acreage, you have some flows shows, some recompletions from some deeper wells that produced oil at that same second Bone Spring sand.

So we think we’ve more than likely confirmed another 80 to 90 locations on White City the second Bone Spring sand horizontally, but of course we confuse ourselves with all these Bone Spring objectives and I can only guess how much we confuse others that the Bone Spring if you go from White City and you go Southeast, you had your first Bone Spring which is your Avalon Shale. You have you’re the second Bone Spring sand. We have a third Bone Spring play that’s where we recorded the 30,000 acres down in Ward and Winkler County, so it’s really is a multi-pay very rich environment.

2011 Update - Recent notable horizontal Bone Spring wells brought on production (30-day gross average) this quarter include the Howard 33-22 3H (100% working interest) at 980 barrels equivalent per day (Boe/d), Crescent Hale 1 Fed 1H (100% working interest) at 940 Boe/d, Fields 33-27 1H (100% working interest) at 820 Boe/d and the Mallon 34 Fed 18H (84% working interest) at 670 Boe/d.

Devon Energy DVN - Devon Energy is saying that the cost of a Bone Spring Oil Well is around 3.8 million dollars. Devon has 170,000 net acres in the Bone Spring Shale.

In the Permian Basin, Devon increased oil and natural gas liquids production 22 percent compared to the fourth-quarter 2010. Liquids production accounted for nearly 75 percent of the 53,000 equivalent barrels per day produced in the Permian Basin during the quarter.

The company completed eight operated Bone Spring wells within the Permian Basin in the fourth quarter. Initial daily production from the eight wells averaged more than 600 Boe per day per well.

Well, we've had a number of good Bone Springs wells in the quarter. I think we highlighted, actually, in the earnings release that we had a number of good Bone Springs wells on the order of around 600 barrels a day or so that we achieved out there. I think we had 8 wells average more than 600 barrels per day, 8 operated wells in the fourth quarter that achieved more than 600 barrels a day so we're seeing very good results out there. We see a good inventory of opportunities sitting out there. We estimate we probably have 350 to 400 locations remaining in the Bone Springs just on our existing inventory and will probably drill somewhere around 80 this year. So again, you can see 4- to 5-year inventory of Bone Springs opportunities.

Anadarko Petroleum APC - In the Delaware Basin of West Texas, where we began to see two more oil-focused opportunities in the Bone Spring and Avalon Shale, where we hold about 550,000 gross acres. We, along with our partners, are now running seven rigs in the area. In the Bone Spring, we continue to see IPs of more than 1,000 barrels of oil per day, with natural gas that has 10:10 PM a high Btu content and good market access. We're also seeing encouraging results from our first two operated Avalon Shale wells. They're each approaching 700 barrels of oil equivalent per day. By the end of the year, we expect to have completed about eight exploration test wells in the Avalon Shale.

With regard to the Bone Springs, we have about 20 wells that are in some state of either drilling, completing or tying in.

Occidental Petroleum OXY - We're currently drilling a number of Bone Springs location, deeper Bone Springs, which as you know, it's just below the Avalon Shale, and we're testing those with horizontals and seeing some pretty encouraging results.

Range Resources RRC - Range Resources is doing a bit of drilling in the Bone Spring Shale -

We also continued our successful deepening of wells in Conger Field coupled with the successful Wolfcamp recompletion. These four wells averaged 561 barrels of oil equivalent per day each. We have been mapping the horizontal oil potential work properties in the Permian basin. To date, we believe we have about 155 gross and 118 net locations combined between our Conger Field and Powell Ranch properties in West Texas and Loving properties in Southeast New Mexico. Our first well will be in Powell Ranch and should spud early next year.

The target formation at Conger and Powell Ranch is primarily the Wolfcamp Shale and the target formation in New Mexico is the Avalon Shale in Bone Spring. All of our acreage in these three field is held by production. We think that our properties in the Permian have a lot of that Bone Spring, Avalon, Wolfcamp potential that others are doing. So we think we're in a great, great position.

Energen Corp EGN - Energen Resources' 3^rd 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 3^rd Bone Spring drilling programs in 2012 and 2013 will be concentrated in this core area.

Energen Resources also is adding 4 net wells to its 2012 drilling schedule; this brings the total number of wells to be drilled in the horizontal 3^rd 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) 3^rd 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 3^rd 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.

At $100 per barrel of oil and $4 per Mcf of natural gas, Energen estimates that its 3^rd 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 3^rd 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 3^rd 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.

Sandridge Energy SD - We have the data rooms open on the Wolfberry and Bone Spring packages and should sign PSAs this year, with projected closing January of 2011. We've also identified other non-core oil packages in the Permian Basin that could be sold in 2011.

So whenever we look at the different plays, we've made our choice and our choice for our company is going to be the vertical Permian and the horizontal Miss. Now with that, that doesn't mean that those plays are bad. It just means that in the Bone Springs, it looks like a fabulous reservoir to drill for, I just think it has a little bit more risk. It's currently in the play and the wells look fantastic, but for us focusing on the shallower and lower cost wells are where we want to focus.

Legacy Reserves LGCY - And you guys are soothing in really what kind of a hardest market right now as far as Crockett County and Reagan County as far as the Wolfberry activity in the A&D, and different drilling techniques, and I guess new offers coming in. Is there anything out there that you see that may change the way you guys operate or as far as have any sort of interest in horizontal wells or even monetizing some of the formations?

We take in a significant recognizance effort on the Wolfbone and Bone Spring plays. It’s clearly the Wolfberry play has had an impact. Legacy is going to continue its drilling program as the big change in our history. We’re very excited about that because we’ll be more efficient and we’ve got a great inventory.

Two of which are very significant horizontal wells, one in the Granite Wash, one in the Bone Spring. Neither one of those have been spudded, and in the past we’d be inclined to form those valves, but we have to see, I guess in additional development proof of concept around us, coupled with the – are getting comfortable. We’ve got third Bone Spring opportunities in Mexico that one of our public company partners and it’s kind of actually larger interest than they are, have proposed we’re evaluating that.

Our bias is much more to participate today than it would have been in the past due to one of increasing scale to the increasing data that supports the development concept. And three, the economics of drilling oil wells in the Permian basin is still very attractive.

Samson Oil & Gas SSN - NEW MEXICO - WESTERN PERMIAN BASIN - State GC Oil and Gas Field - Samson 27% Working Interest - The State 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.

Whiting Petroleum WLL - Whiting Petroleum (WLL) is active in the Bone Spring Play - Big Tex Prospect. As of April 15, 2011, Whiting had accumulated 111,665 gross (83,303 net) acres in our Big Tex prospect area in Pecos, Reeves and Ward Counties, Texas in the Delaware Basin. We are also continuing to acquire acreage in this area. Our average acreage cost to date is $516 per net acre, and we have an average working interest of 75% and an average net revenue interest of 56%. We have completed 10 vertical wells over the past nine months in the southern portion of the Delaware basin. Prospective formations include the Wolfcamp and Bone Spring horizons.

Our first vertical well in this area, the Trainer Trust 16-2, had a peak flow rate of 816 BOE per day and continued to flow for six months, producing over 45,000 barrels of oil during its first six months of production. The well produced at a restricted rate for 45 days during that period. Subsequently, nine vertical wells have been completed with average initial production rates of 283 BOE per day. We have four drilling rigs in Big Tex and recently kicked off a four-well horizontal drilling program. We consider this play to be in an early stage. Further drilling is subject to evaluation of our drilling and completion results.

PetroHawk Energy (HK) - Petrohawk Energy (HK) Expands to the Bone Springs - Petrohawk began building an acreage position in the Permian Basin in the second half of 2010, and has now acquired or has committed to acquire approximately 325,000 net acres at an average cost of approximately $1,400/acre with over 90% expected to be operated. The Company's core position includes acreage in the Midland Basin, where the primary target is the Lower Wolfcamp, and acreage in the Delaware Basin, where the primary targets are the Lower Wolfcamp Shale, Bone Springs Sands and Avalon Shale.

The Delaware Basin holds three objectives - the Avalon Shale, Bone Springs Sands and the Wolfcamp Shale, in a gross interval of approximately 3,000 feet. These targets are found at a vertical depth of between 5,000 and 12,000 feet across the basin. The Company expects a product mix of primarily condensate and natural gas with significant NGL yield. Horizontal wells are forecasted to cost between $6.5 and $8.0 million.