Devon Energy Corp.'s (NYSE: DVN) risked drilling inventory in the Delaware Basin has increased by 20% following a successful Leonard Shale stacked spacing test in southeast New Mexico, the company said Dec. 6.
The Oklahoma City company's Thistle spacing pilot tested average 30-day IP rates of 1,800 barrels of oil-equivalent barrels per day (boe/d) per well, of which 75% was light oil. The pilot tested 400-foot vertical spacing between the Leonard Shale “B” and “C” intervals in the southwest corner of Lea County, N.M.
Devon's Leonard downspacing success yields inventory expansion, increasing the company's risked gross locations to 950 (predicted on six wells per section) from previous estimates. This early-stage development play has potential for greater than 1 billion boe of recoverable resource, Devon said.
Mike Kelly, senior analyst with Seaport Global Securities, said Devon's estimates could prove conservative given ongoing downspacing efforts aimed at ultimately testing up to 24 wells per section across the Leonard A, B, and C.
"We like Devon’s expanding high-quality Delaware inventory, which should serve as a material growth driver going forward," Kelly said in a Dec. 7 report.
Kelly also sees additional positive implications from Devon's success for nearby players including Concho Resources Inc. (NYSE: CXO), EOG Resource Inc. (NYSE: EOG), Matador Resources Co. (NYSE: MTDR), Occidental Petroleum Corp. (NYSE: OXY) and WPX Energy Inc. (NYSE: WPX).
The Thistle wells were drilled with 7,000-foot laterals at a cost of about $6 million per well, Devon said.
Overall, Devon has 60,000 net surface acres in the Leonard Shale play, with gross pay ranging up to 1,100 feet and as many as three different landing intervals. Adding up the Leonard leasehold by target landing interval, Devon has exposure to 160,000 net effective acres.
Recommended Reading
BP Restructures, Reduces Executive Team to 10
2024-04-18 - BP said the organizational changes will reduce duplication and reporting line complexity.
E&P Earnings Season Proves Up Stronger Efficiencies, Profits
2024-04-04 - The 2024 outlook for E&Ps largely surprises to the upside with conservative budgets and steady volumes.
M4E Lithium Closes Funding for Brazilian Lithium Exploration
2024-03-15 - M4E’s financing package includes an equity investment, a royalty purchase and an option for a strategic offtake agreement.
Laredo Oil Subsidiary, Erehwon Enter Into Drilling Agreement with Texakoma
2024-03-14 - The agreement with Lustre Oil and Erehwon Oil & Gas would allow Texakoma to participate in the development of 7,375 net acres of mineral rights in Valley County, Montana.
California Resources Corp. Nominates Christian Kendall to Board of Directors
2024-03-21 - California Resources Corp. has nominated Christian Kendall, former president and CEO of Denbury, to serve on its board.