Oil and gas operators are solving the Anadarko Basin’s geologic and engineering puzzle one layer at a time, moving the regional play to the watch list of zip codes where oil and gas operators want to be over the next half decade.

The Anadarko has quietly joined the Permian Basin in the stacked-play renaissance that promises to transform oil and gas—just as the shales have done over the past half decade.

With as many as 11 stratigraphic objectives spanning more than 3,500 feet in the Granite Wash alone—and a potential for 16 total targets when other formations are included—the Anadarko Basin is front and center in the industry trend toward stacked-formation pays. Those enticing layer-cake basins provide additional proof of the old industry maxim that the best place to find hydrocarbons is where hydrocarbons have been found previously. In the case of the Anadarko Basin, hydrocarbon production stretches back 100 years, to 1913.

Now, with the industry evolving beyond the one-hit wonders of shale plays, where production originates from a few hundred feet at most of saturated column spanning one to three formations, the Anadarko, like its larger cousin, the Permian Basin, presents a cornucopia of stacked formation hydrocarbon possibility in stratigraphic columns that span a thousand feet or more.

How big a prize remains in the broad-shouldered Anadarko, which sprawls across 70,000 square miles of western Oklahoma, the Texas Panhandle and southwestern Kansas? In one of its periodic mineral assessments, the U.S. Geological Survey in 2010 estimated the remaining recoverable resource at one-half-billion barrels of oil, 27 trillion cubic feet of gas, and more than 400 million barrels of natural gas liquids. That prize compares to the estimated 125 trillion cubic feet of gas and 5.4 billion barrels of oil equivalent produced from the Anadarko Basin over the past century.

So it is little wonder that additional development is on tap in a mature basin featuring abundant well control data, a well-developed infrastructure, and industry-friendly landowners and governmental entities.

For example, private-equity-backed independents are applying drilling and completion techniques perfected in high-profile shale plays to extend the productive range of the Cleveland sands in the northern Texas Panhandle and northwest Oklahoma. Although headlines about blockbuster wells are more common in the Granite Wash, operators have drilled the largest number of Anadarko Basin horizontal tests in shallower, Pennsylvanian-aged Cleveland sands.

“Basins like the Anadarko are felt to be more ‘proven,’ given the amount of well control that exists,” says Mike France, a Houston-based managing director for First Reserve Corp. The firm is backing three experienced management teams in the greater Anadarko Basin. “We believe there is still substantial development opportunity in these multistacked zones. The question is what, ultimately, will be the most effective way to produce these zones?”

First Reserve is celebrating its 30th anniversary in 2013 and has invested more than $4 billion in 30 oil and gas companies over the past three decades. The private-equity firm’s current active portfolio includes 12 exploration and production companies across five continents. It underwrites diversified holdings by targeting a range of opportunities, from high-impact exploration to lower-risk, mature development.

That philosophy has brought the private-equity firm to the Anadarko. Two companies in First Reserve’s current portfolio are active in the Anadarko and a third is pursuing development in the nearby Mississippi Lime. The companies include Templar Energy LLC, led by David Le Norman, whom First Reserve has backed previously. Oklahoma City-based Templar acquired 7,000 net acres in Ellis and Roger Mills counties in Oklahoma during fourth-quarter 2012. Additionally, Greenwich, Connecticut-based First Reserve acquired an equity partners stake in Sabine Oil & Gas (formerly NFR Energy LLC), which owns a 64,000-netacre position in the Anadarko Basin targeting the Granite Wash and Cleveland sands.

“What we really like about the Anadarko is the multipay potential,” France says. “We are seeing people testing some of the additional benches in the Granite Wash as well as other zones. Areas that historically have been, say, a Cleveland sand producer are now witnessing operators testing the Tonkawa or Marmaton.”

Those operators tend to be technically savvy and employ a toolkit that applies 3-D seismic and improvements in geosteering to fine-tune targeting within multiple stratigraphic formations that may individually be 20 feet or less in thickness. The techniques are paired with completion practices imported from the Eagle Ford or Haynesville, such as tighter cluster spacing and greater proppant volume to increase well stimulation intensity and optimize results across a hydrocarbon column that ranges from very deep dry gas to mid-depth natural gas liquids to shallower zones of crude oil production.

Such efforts are expanding opportunities in the Anadarko Basin both vertically—more stratigraphic targets—and areally, stretching the boundaries of existing production.

“What we have seen is that the basin can still be larger than what people know today,” France says. “We believe that there is an opportunity to step out in multiple directions and there are still efficiencies to be obtained through the optimization process.”

An E pluribus unum of basins

The Anadarko Basin proper contains several hydrocarbon sub-regions, including the 95-mile fairway of Cleveland/Tonkawa sands in the Texas and Oklahoma panhandles, the 130-mile long Granite Wash play, with 11 different stratigraphic targets, the Cana Woodford just west of Oklahoma City, which is primarily a dry-gas and natural gas liquids play dominated by a few main players, and the Anadarko Woodford extension, or the South Central Oklahoma Oil Province (SCOOP). The latter stretches south in a 100-mile fairway from the Cana Woodford to the valley of the Red River, which separates Texas and Oklahoma.

In recent months, a number of publicly held oil and gas companies have been targeting the Permian-aged Marmaton formation from the Oklahoma Panhandle, where Unit Corp. purchased Noble Energy properties in 2012, to a developing exploration effort just outside the basin on the eastern plains of Colorado and the Nebraska Panhandle

The Anadarko Basin proper also incorporates the Kansas shelf portion of the Mississippi Lime, which lies west of Oklahoma’s Nemaha Ridge, a buried horst complex that divides the Mississippi Lime into a western and eastern province. Four horizontal plays, in the Cleveland sands, the greater Granite Wash, the Anadarko Woodford and the Mississippi Lime, dominate current activity in the basin.

Headline focus has turned in recent years to the deep Anadarko Basin north of the Amarillo/Wichita uplift. The deep basin cuts southeast from the Texas Panhandle into Oklahoma and was filled as clastics that eroded out of volcanic mountains across a short shelf and over the shelf edge into the deeper basin, commingling as interlocking submarine fans in Pennsylvanian and Permian times.

The deep basin is the location for the Granite Wash play, whose regional nomenclature generates confusion for casual observers because of the wide variety of Granite Wash play names. Headlines may trumpet exciting news about the Hogshooter Wash, or the Cottage Grove Wash, or renewed interest in the Marmaton Wash—terms derived from locally recognized Kansas Shelf nomenclature.

However, a consortium of operators working on a regional geologic assessment of the Granite Wash with Core Laboratories Ltd. has developed a Rosetta-like model that normalizes the local Tower of Babel nomenclature. That consortium foregoes regional nomenclature and has divided the Granite Wash into 11 alphabet- ized producing formations, from A to J, that span 3,500 feet of stratigraphic column.

Each of those alphabetized formations has an individual core area somewhere along the 130-mile fairway, while all formations produce hydrocarbons in some volume. Thus, a Hogshooter or Cottage Wash signifies specific core areas of deposition in different parts of the Granite Wash fairway spatially, but also in time across the Pennsylvanian and Permian eras.

Anadarko by the numbers

As of March, regional rig counts for the basin were topping 110 units drilling horizontally. Separately, the Mississippi Lime featured another 75 rigs active horizontally on both sides of the Nemaha Ridge.

Operators will keep overall spending in the Anadarko Basin flat in 2013 because of lower natural gas and natural gas liquids pricing. Still, several operators have announced 2013 capital spending plans that suggest the industry will invest more than $6.6 billion basinwide in horizontal drilling.

Farther east, another $3.8 billion will target the Mississippi Lime, meaning 2013 Midcontinent spending across the Texas Panhandle and the western half of Oklahoma will approach $11 billion, including vertical drilling.

Activity in the basin remains dynamic. Last year’s collapse in natural gas liquids pricing dampened drilling in the Cana Woodford, where the rig count fell from a peak of 47 units during third-quarter 2011 to just 20 at the end of fourth-quarter 2012.

In 2013, the Cana Woodford is transitioning from optimization to resource harvest as companies such as Devon Energy Corp., which holds 255,000 net acres in the Cana, move to capture drilling efficiencies through pad drilling. Devon is producing 4,500 barrels of oil and 13,200 barrels of gas liquids per day out of the Cana Woodford and will invest $550 million to employ 13 rigs in a 150-well effort.

The big news for the Woodford shale in western Oklahoma is its extension as a crude oil target for development south, from the current, gassier Cana Woodford core to the Oklahoma boundary. During an analyst day in October 2012, Continental Resources Inc. revealed it had blocked up 197,000 net acres in the SCOOP that are prospective for liquids-rich Woodford shale. The Anadarko Woodford extension spans portions of four Oklahoma counties, featuring an oil-rich column more than 300 feet thick with 70 billion barrels of original oil in place.

The fairway includes three of the top oil-producing counties in Oklahoma, which have combined to yield 3.2 billion barrels of oil from 60 reservoirs over the past 100 years. Continental has drilled three dozen net wells to date in the play and will increase its 2013 rig count to 12 units from the six it employed in 2012, targeting 41 net wells with $450 million in capital spending.

“We continue to be very pleased with the results we’re getting from our new SCOOP project in Oklahoma,” Winston Bott, chief operating officer for Continental, said during the company’s fourth-quarter 2012 conference call. “In particular, both the oil and condensate fairways are delivering repeatable results.”

Room for all

The big player in a consolidating Anadarko Basin remains Apache Corp. following its $2.85-billion acquisition of Cordillera Energy Partners III LLC in January 2012. That deal brought Apache’s Anadarko holdings to 512,000 net acres, with access to a resource base of 5.4 billion barrels of oil equivalent. The company is currently producing 79,250 barrels of oil per day out of the Anadarko.

Apache will increase its rig count from an average of 18 in 2012 to 29 in 2013, with $1.4 billion in capital spending targeting 300 wells spread across the Granite Wash, Cleveland/ Tonkawa sands, the Marmaton, and the Canyon Wash in the Whittenberg Basin north of Amarillo, Texas.

In a region dominated by larger players, including Apache, Linn Energy LLC, Devon Energy Corp., Cimarex Energy Co., and Continental Resources, Inc.—not to overlook ConocoPhillips Co. and Marathon Oil Corp.— is there additional room at the table?

First Reserve’s Mike France thinks so—despite competing elbow-to-elbow for acreage with larger, well-capitalized players, or against royalty trusts or master limited partnerships that have lower capital costs. For First Reserve, it involves a strategy of acquiring acreage, developing it, then selling the parcel up the food chain to larger companies—and repeating the process again with an experienced management team.

“There is quite a bit of opportunity, but the basin is fairly well-consolidated,” France says. “In order to capture that opportunity, you need to be partnered with experienced management teams, which, for us, is a repeat management team who has been in the basin before, whom we have worked with before, and who has spent their entire career in this basin. You can literally build section by section to consolidate positions to get to the scale to be interesting to someone like an Apache or Linn. But for someone who is a brand new entrant, someone who hasn’t been in the basin, it is a challenge.”