Onshore and offshore on the ultra-deep shelf, operators are going after this tight-sands formation with all the technology at their disposal.

Whither the Wilcox? It's a geologic formation that has brought fame to the deepwater Gulf of Mexico, notoriety to the ultra-deep shelf, and hope for a revival onshore along the upper Gulf Coast through the promise of horizontal drilling and multistage fracturing.

As this spectrum of activity suggests, the Wilcox is a multifaceted—and multidimensional—tight-sands resource play that is challenging the technical capability of the modern oil and gas industry. Tools to exploit Wilcox targets range from state-of-the-art ultra-deep-water rigs (UDW) working in 7,800 feet of water, to high-spec jack-ups probing high-temperature, high-pressure formations as deep as 32,000 feet, to beefed up deep-drilling land rigs. Operators are seeking their slice of the tight-sands pie across a geographic province that stretches into the deepwater 300 miles south of central Louisiana, and west along the upper Gulf Coast into Texas.

While fruits from the deepwater Gulf Wilcox are at hand with Lower Tertiary and Lower Tertiary Inboard discoveries, the Wilcox remains the frustrating carrot on a stick for the ultra-deep shelf players, despite well costs approaching a quarter-billion dollars. Meanwhile, the industry is evaluating a gradually expanding body of positive news onshore, where the Wilcox has become the focus of rejuvenation efforts involving new technological approaches to an oldie-but-goodie geologic target.

If the ultra-deep shelf play and the horizontal sorties onshore unfold as expected, new life is here for a venerable old geologic column that has offered an estimated ultimate recovery (EUR) of 24 trillion cubic feet of natural gas equivalent onshore since initial exploitation in the 1930s, to as much as 150 trillion cubic feet of natural gas equivalent from the ultra-deep shelf. Added to that is a potential resource of 15 billion barrels of oil equivalent (BOE) in the deepwater offshore following the initial Gulf of Mexico discoveries at BAHA 2, Trident and Great White a dozen years ago.

Recent news has originated onshore, where two public independents, Midstates Petroleum Co. and Unit Corp., are chipping away at the Wilcox in south-central Louisiana and southeast Texas.

Midstates is focusing on the Louisiana Wilcox in Beauregard, Allen and Evangeline parishes, where it is coaxing hydrocarbons out of an interbedded geologic column more than 3,000 feet thick, lying 9,000 feet or more beneath the surface. The company has reentered more than half a dozen legacy fields, applying horizontal drilling and multistage fracturing after employing 3-D seismic to guide the development program. Midstates completed four horizontal Wilcox wells during the second quarter of 2013, including three in North Cowards Gully Field and one in South Bearhead Creek at its DeQuincy area in Vernon Parish on the Texas-Louisiana border.

One well, Wood 10H-1, at North Cowards Gully, featured a strong initial production rate but encountered mechanical issues—a common element in the challenging Wilcox drilling. Based on the early well results, Midstates opted to sidetrack the well during the third quarter.

Elsewhere, Midstate's first horizontal well at South Bearhead Creek, Musser Davis 33-28 HC-1, was flowing at more than 400 BOE per day after 90 days online. Midstates subsequently completed Musser Davis 27 HC-1 in the Wilcox “D” bench during third-quarter 2013 at a total measured depth of 19,208 feet, including a 4,733-foot lateral. In mid-September, the well was producing at a choked-down rate of 967 BOE per day, 80% oil, from 11 frac stages.

Wilcox production in Louisiana topped 5,500 BOE per day in mid-September from 170 producing wells scattered across four fields and 118,120 net acres, according to a Midstates investor presentation. It appears that both North Cowards Gully and South Bearhead are commercially attractive through horizontal drilling, although the independent is classifying its Wilcox efforts as marginally economic at the nearby West Gordon Field.

The Wilcox was a significant factor in Unit Corp.'s decision to raise 2013 production guidance, though the company also included contributions from its Midcontinent Mississippian Lime play. Unit's current Wilcox focus is Gilly Field in southeast Texas, where the company increased its estimated resource potential 31% to a net 220 billion cubic feet equivalent of natural gas following the 2012 discovery. The new estimate represents nearly one-fourth of Unit's 2012 proved reserves, though to date the company has booked only 30 billion cubic feet equivalent in proved Wilcox reserves.

Unit drilled 120 vertical wells targeting the Middle Wilcox after 2003, generating 143 billion cubic feet equivalent in cumulative gross production, characterized as 43% oil and natural gas liquids. In 2011, the company's technical staff noticed a deeper geologic marker after reviewing 3-D seismic and identified a 1,000-acre structure in the Lower Wilcox that became the 2012 Gilly discovery. Currently, Unit's exploration efforts are focusing on a similar structure about a mile north of Gilly Field, where it has drilled two tests with one encountering 250 feet of potential play.

Unit was completing a 2,800-foot lateral section at 14,500 feet in September on its first horizontal Wilcox test at an estimated cost of $9.5 million. The company recently added a second rig to the play and sees horizontal drilling as a complement to its ongoing vertical Wilcox program. Unit will spend $78 million net in 2013 on a 12 to 14 gross well Wilcox program. The company's vertical program commingles production from four sands and is targeting four additional zones in the future. Vertical well costs average $5.4 million.

Unit is also involved in a recompletion effort in Gilly Field and the nearby Wing area on wells that had been drilled during the past four years. Three Wilcox recompletions in the second quarter of 2013 increased production 400% over prior levels, adding 10 million cubic feet equivalent per day of natural gas. Unit is currently generating 38 million cubic feet equivalent per day of natural gas out of the Wilcox. The three recompletions cost $2.3 million, or about half the level of a new vertical well.

Meanwhile, a third onshore player plans to divest properties with Wilcox potential in southwestern Louisiana. Swift Energy Co. opened a data room in September 2013 for 147,000 acres prospective for Wilcox sands at its South Bearhead Creek and Burr Ferry locations in Vernon and Beauregard parishes along the Texas-Louisiana border. Swift plans to reallocate capital to its fast-rising Eagle Ford shale development in South Texas. Deal sweeteners include potential Austin Chalk targets, potential Tuscaloosa Marine shale, and acreage held by production or fee, eliminating the pressure to capture acreage under lease expiration deadlines. The properties are producing 2,400 barrels of oil per day and include Swift's Austin Chalk acreage at Masters Creek in Louisiana. The company anticipates final bids on the package by the end of 2013.

Deepwater action

In early 2013, the offshore Wilcox was generating a different set of headlines, 300 miles south of Midstates' Louisiana properties. Out in the deepwater Gulf, Chevron Corp. was working with new completion technology in preparation for the scheduled 2014 production start-up of the Jack/St. Malo complex, which will produce 94,000 BOE per day, at peak, out of Wilcox targets. A recently installed $7.5-billion Jack/St. Malo production platform is designed to process 177,000 BOE per day out of the Wilcox, including third-party subsea tiebacks.

Chevron Corp. released results of a production test in Walker Ridge Block 678 on the St. Malo PS003 in February 2013 that indicated the well generated more than 13,000 barrels of oil per day in an equipment-constrained environment from the Lower Tertiary Wilcox. The production test, initially conducted in third-quarter 2012, was completed in more than 7,000 feet of water at 20,000 feet below the mudline and served as the first of three offshore production tests employing a single-trip multizone frac pack. The completion technique, which had been tested onshore in Colorado and California, reduced rig time—Chevron claims a savings of 50 days at a cost of $50 million on the St. Malo test—and enhanced initial production rates.

During an analyst day in March 2013, Chevron operations personnel told attendees that the new single-trip multizone completion technique could produce up to 20,000 barrels of oil per day in an unconstrained setting. The three Jack/St. Malo production wells using the new completion technique generated rig time savings ranging from 20 to 50 days per well. Chevron is experimenting with adding electric submersible pumps inside the wellbore to double Wilcox recovery factors to a potential 20%, which would turn the Jack/St. Malo Wilcox program into a 500-million-barrel oil field.

With the Wilcox generating hydrocarbon promise in the Lower Tertiary and Lower Tertiary Inboard in the deepwater Gulf, and renewed operator interest 300 miles north onshore, the question turns to what is happening in the intervening landscape. Connecting the deepwater Lower Tertiary Wilcox fairway, which stretches in a 300-mile east/west arc about 50 miles wide, to the widely extensive fluvial and deltaic Wilcox targets onshore has been technically challenging, because the overlying salt weld creates an opaque barrier for offshore seismic operations. Despite that, McMoRan Exploration Co. (now Freeport McMoRan Copper & Gold Inc.) confirmed the continuous nature of the Wilcox in 2010 with the Davy Jones I discovery, which identified a 20,000-acre block and 200 feet of net Wilcox pay.

Subsequent efforts to test the productive potential of the Lower Tertiary Wilcox in a 200-mile area on the shelf and another 200 square miles in the Transition Zone and onshore have been beset by mechanical issues associated with working in a high-temperature, high-pressure environment six miles below the rig floor.

Mechanical setbacks were a temporary issue on the Chevron-operated Lineham Creek ultra-deep test on land in Cameron Parish, Louisiana. Drilling is suspended currently at Lineham Creek, with plans to complete the well in the first quarter of 2014. Energy XXI and Mc-MoRan Exploration, two working interest partners, indicated the well successfully produced cores from the upper Wilcox. Prior to the merger with Freeport McMoRan, predecessor McMoRan Exploration claimed potential 3P gross reserves of 547 billion cubic feet equivalent on the Lineham Creek and 12.9 billion cubic feet equivalent in proved reserves in February 2013, becoming the first company to book ultra-deep reserves. Elsewhere, the first ultra-deep production test at Davy Jones I is a $340-million non-flowing well.

Since then, the ultra-deep Wilcox story line had seen few new headlines. Players have been discussing as many as 20 potential wells targeting ultra-deep prospects with initial production in the first half and Wilcox revenue flow by the end of 2014. Wilcox watchers are waiting.

For more on the Wilcox Trend, see OilandGasInvestor.com.