Capex in the South-Central Oklahoma Oil Province (Scoop) core should top $4 billion. An analysis of the Scoop’s best production sites shows it on par with the Eagle Ford and Bakken, according to a study by Wood Mackenzie released Feb. 10.

"The region will see drawbacks. Rig counts are down in the near-term but production won’t fall off by much, and we expect it to bounce back quickly in 2016," said Brandon Mikael, analyst, U.S. Lower 48 Upstream. "It's still one of the most exciting growth areas in the Lower 48 because of the stacked pay potential."

Wood Mackenzie looked at the Scoop, Stack and Cana Woodford plays, dividing them into nine sub-play areas that span the Anadarko and Ardmore basins of the Midcontinent.

"The area has some of the largest producing wells in the Lower 48, bigger than the Permian and Bakken and comparable to the best parts of the Eagle Ford," Mikael said.

Oil breakeven points are lowest in the Scoop core, where Springer production is economic at WTI prices of $41 per barrel (bbl) and Woodford wells at $47/bbl, based on Wood Mackenzie’s assumption of long-term Henry Hub price of $4.12 per thousand cubic feet (mcf).

The firm’s analysis of the Scoop’s sub-plays found:

  • Springer Shale—The best economics but limited running room: The $41/bbl WTI breakeven for the Springer sub-play is lower than the Bakken Parshall Sanish (breakeven $45/bbl) and Eagle Ford Karnes Trough sub-plays ($48/bbl), widely regarded as the best parts of those plays.
  • Upstream capex expected to surpass $4 billion in 2015: While operators will experience near-term relief in drilling and completion costs in response to lower commodity prices, the benefits are somewhat mitigated by an increasing concentration of activity in core areas where well costs trend higher was wells go deeper and laterals longer.
  • Horizontal rig count: Horizontal rig count is expected to average 60 rigs in 2015. A pullback is expected from 2014's peak of 92 rigs as operators pivot from delineating unproven areas to focusing on drilling to hold core acreage.
  • Noncore sub-plays will struggle at current prices: Type wells in four sub-plays are not NPV-10 positive under the current base price deck (2015 WTI at $55/bbl and Henry Hub of $3.40/mcf) due to challenging, heterogeneous geology that contributes to the inferior well productivity relative to the best parts of the play.
  • By 2020, production will surpass 1 million barrels of oil equivalent: Production should also become more weighted toward oil as Scoop and Stack development outpaces Cana Woodford. While crude and condensate will make up 22% of the overall production mix in 2015, that should grow to 26% by 2020.