OKLAHOMA CITY—Oklahoma’s Scoop and Stack plays are like the youngsters who older relatives fuss over at family reunions, marveling at how fast they’ve grown. At Hart Energy’s recent DUG Midcontinent Conference & Exhibition, Jack Stark, president and COO of Continental Resources Inc. (NYSE: CLR), pointed out that his company announced its discovery of the Scoop/Woodford only a few years ago, in 2012. Meanwhile, Newfield Exploration Co. (NYSE: NFX) discovered the Stack in 2013, and Continental Resources added another iteration with its Scoop/Springer blend in 2014.
“These are relatively young plays,” Stark said. “They’ve come a long way in a short period thanks to the efforts of a number of public and private companies. Now they are truly world-class resource plays.”
Bank of America rates them at the top among U.S. plays, he said.
The Stack held the No. 1 position in the bank’s Aug. 29 research report based on single well rates of return (RORs) at $45 per barrel (bbl) oil and $2.50 natural gas. The overpressured Stack can post about a 70% ROR at those prices. The Scoop condensate and Scoop oil can post about a 30% ROR, and the Stack oil segment, about a 25% ROR. For the overpressured Stack, that’s a lot higher than the bank’s figure for the vaunted northern Midland Basin Wolfcamp A&B Tier 1 plays, which yield about 33% RORs.
The Stack hosts about 50% of the rigs at work today in Oklahoma. When combined with the Scoop, the two plays are attracting 75% of the state’s rigs.
Continental has 15 rigs at work there, with 11 targeting Stack and four drilling for the Scoop resource.
Stark said operators have sent about 2,100 horizontals into the 200-mile-long Woodford petroleum system to date, with about 1,400 of those targeting the “very prolific” Scoop and Stack reservoirs.
Continental holds about 26,000 net reservoir acres in the Scoop/Stack and operates about 360 wells (it’s been in plenty of nonop wells also). The company took advantage of the slowdown in drilling in 2008-2009 to put together its acreage position and today, three-quarters of its holdings are legacy.
Stark said the company is proud of its organic growth strategy. “If you look at our production and reserve growth history, you see it’s the classic profile of an organic growth company,” he said. “These are grassroots projects.”
The vast potential of the Oklahoma resource action is reflected in that history as well. Today, Stack/Scoop represents 35% of the company’s production and 40% of its reserves. “That’s where our production for the company as a whole was in 2012,” Stark pointed out.
The same trend is reflected in its reserves. In 2015, those reserves equaled the company’s overall numbers of 2011. “That’s the impact these two plays have had on our company,” he said.
Continental announced its first well in the overpressured Stack’s Meramec in August 2015 and has since completed 15 wells, de-risking 300 square miles and testing three zones. Stark called the results an example of “excellent repeatability.”
These are big, big wells. Some of the stars in the overpressured western portion of the play hit about 3,500 boe/d, 27% to 71% oil, at more than 4,000 pounds per square inch (psi) of pressure. Others are nearly as strong.
Taking into account three months or more on production, the wells are even more impressive—“the biggest wells I’ve been involved with in my 35-year career”—Stark said. The Ludwig has more than 300 days on production and has turned in cumulative production of 279 Mboe, 74% oil, and is still producing 767 boe/d, with a flowing pressure of 1,275 psi.
Continental has reduced drilling times by 40% and drilling costs by 20%, and now is focused on density pilots supported by the first microseismic project in the play. It has more than 1,200 potential net Meramac and Woodford drilling locations.
The economics in the overpressured oil window are stout: 100% ROR at $50/bbl, and 70% ROR at $40/bbl WTI with a drilling cost shaved to $9 million in 2016. The target EUR is 1.7 MMboe with an average lateral length of 9,800 ft.
Stark said the Stack Meramec is quickly expanding through step-outs and density testing. Continental has 18 wells waiting on completions. There are nine “true” industry density tests underway/producing, he said. They are testing up to seven wells per zone. Continental has three density tests at work testing four to five wells per zone (Meramec and Woodford).
In the Scoop, Continental now holds 384,000 net acres in the Woodford and 191,000 in the Springer, with four rigs at work. The company had the luxury of being patient while others pioneered the play on the east side and moved it west to the more overpressured window. Today, Continental is pioneering the play further west.
The costs are higher on the western side, to the tune of an additional $1 million per well, but “the results justify the investment. You get three times more production on the west side in the first 100 days compared with the east side,” he said. “We see higher pressure and improved quality of reservoir when moving to the west. We’re very fortunate to have our position there.”
Continental is focused on enhanced completions, which have lifted production by 40% in the Woodford condensate wells. A 100% ROR for incremental capital spend of $400,000 is the result, based on up to 100% more proppant per foot and 50% more fluid.
To help define what full field development might look like in the Scoop/Woodford condensate play in Stephens County, Okla., Continental conducted a density pilot where 10 wells yielded 166 MMcfe/d on IP test, 7% oil. “It’s amazing,” Stark said. “That about would fill a pipeline just on its own.”
The Scoop/Springer is an oil asset that will wait for higher commodity prices and additional work on enhanced completions and lateral length to be developed further, Stark said. “It’s a play in our back pocket, and we hold close to 200,000 acres,” he said. “Further, our 50% ROR at $50 for the play is based on old technology.”
In closing, Stark pointed out an important benefit to the Stack and Scoop that isn't fully appreciated. “They are very dry reservoirs, without a lot of associated water production,” he said. This gives them a lower lease operating expense, particularly relative to pure Permian players. “The quality of rock and saturation does translate to the bottom line.”
Susan Klann can be reached at firstname.lastname@example.org.