Everyone loves a good detective story. The latest is unfolding in eastern Colorado, where operators are pursuing a potential stacked oil play targeting Mississippian and Pennsylvanian-aged formations on both sides of the Las Animas Arch, the northeast trending uplift that separates the Denver-Julesburg Basin in Colorado from the Hugoton Embayment in western Kansas.

The region, including Kiowa and Lincoln counties in particular, has experienced a concerted leasing effort over the past two years with recent parcels fetching up to $700 an acre, a jump from $100 to $300 a year ago.

Like all good detective stories, the narrative is off to a fast start in the opening chapter. Major characters include Chesapeake Energy Corp., Pioneer Natural Resources Inc., Anadarko Petroleum Corp. and Devon Energy Corp., although the story line has been driven previously by private independents.

Now the industry is waiting for the plot to thicken as the play transitions from land grab to delineation.

Eastern Colorado has hosted oil and gas activity for five decades as independent operators targeted conventional traps along the flanks of the Las Animas Arch through vertical drilling. Now, they are adopting unconventional drilling techniques to unlock hydrocarbons from multiple stacked targets.

In all, fewer than a half dozen rigs are in the area doing vertical tests for Pioneer in Kiowa County, or privately held Cascade Petroleum LLC in Lincoln County.

In May, Chama Oil & Minerals LLC of Midland, Texas, brought in the Pronghorn State #16-15-48-1H, two miles south of Kit Carson, Colorado, at a reported 2,000 barrels of oil per day. Actual well production data—one of a handful of horizontal tests to date—will not be available until October 2013. However state data shows sidetracks in the horizontal well were completed in the Pennsylvanian Keyes sandstone and Mississippian Salem and St. Louis limestones.

The Pronghorn well and its rumored high flow rate drew comparisons to Colorado’s Jake 2-01H well in Weld County, which generated 50,000 barrels of oil over the first 90 days for EOG Resources Inc. in 2009, setting off the Niobrara shale play.

David Tameron, senior analyst for Wells Fargo Securities, serves as a Mickey Spillane proxy outlining the cold, hard facts of the Colorado caper. He says Chama is rumored to have fronted as operator for Chesapeake on the Pronghorn well, employing a Nomac rig to drill the horizontal well. Nomac is a drilling subsidiary of Chesapeake.

“At this point, the play is still in a ‘proof of concept’ phase and there is not likely much value beyond the current market value of leases ($300 to $700 per acre today),” Tameron wrote in a recent research report. He expects the play could accelerate in 2014-2015.

Otherwise, activity involves vertical tests with a special focus on Lincoln County on the DJ Basin side of the Las Animas Arch where four rigs were at work in May.

Operators have obtained 71 drilling permits in Lincoln County year-to-date, according to the Colorado Oil and Gas Conservation Commission (COGCC). A majority of permits list Mississippian and Pennsylvanian-aged systems as a target with some specifying the Marmaton, Cherokee and Atoka formations specifically. Operators that have filed for permits are overwhelmingly privately held and include Pine Ridge Oil & Gas LLC, Nighthawk Production LLC, Wiepking-Fullerton Energy LLC, and Cascade Petroleum LLC. However, many of those permits are associated with the legacy Great Plains Field in eastern Colorado.

Elsewhere, the COGCC has approved 22 permits for Cheyenne County with Pronghorn Operating LLC as a major player.

Still, the presence of significant characters in the guise of large publicly held independents adds intrigue. Anadarko holds some 800,000 net acres in the region, mostly through land grant minerals covering alternating sections. Pioneer Natural Resources has had a rig active in Kiowa County and drilled a half dozen vertical tests over the past six months. Pioneer is conducting 3-D seismic and has leased more than 600,000 acres.

The Pennsylvanian and Mississippian series in eastern Colorado are found at less than 6,000 feet below surface. Tameron cites costs of $1 million for a vertical well with estimated ultimate recoveries (EURs) of 120- to 130 thousand barrels of oil equivalent.

To date, the play resembles the Mississippi Lime in Oklahoma and Kansas where wells produce light sweet crude and enormous water volumes, but feature low costs to drill and complete.