Oil and Gas Evaluation Report : Oil & Gas Evaluation Professionals : Obsidian Energy Company : · Seismic Interpretation, Petroleum Engineering

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When I first started in the oil patch the Spraberry Trend in the Midland Basin of West Texas was known as the "largest uneconomic oil field in the U.S."  Now we all know that uneconomic depends on price, which was $10 - $20 per barrel at the time.

Today, with oil stabilizing in the $80 range, a once uneconomic play is economic. Combine this with an evolving technology borrowed from the Barnett Shale and you have a very interesting play called the Wolfberry.  The name "Wolfberry" is a hybrid of the words Wolfcamp and Spraberry.

Other than the price, the key to the success of the Wolfberry play is hydraulically fracturing (fracing) the Wolfcamp beneath the Spraberry and Dean formations. This Wolfcamp section is composed of interbedded organic shales and limestones. It is the multi-stage fracing of both the Spraberry and Wolfcamp (Wolfberry) that provides the deliverability of hydrocarbons to the well bore.  Today an average Spraberry only completion will produce initially 10 BOPD (barrels of oil per day), whereas you can expect 40 to 110 BOPD when the Wolfcamp in added.  This initial boost in production makes or breaks the economics.

I evaluated 95 productive wells that Pioneer has drilled since 2006 targeting Wolfberry over the entire Trend area.  After evaluating the production curves we see wells that have a:

• 38 BOPD average IP (initial production)
• 114,000 BOE (barrels of oil equivalent) average estimated reserves (EUR)  
• 20% ROR (rate of return) 
• ROI (return on investment) around 2.7

I have seen similar results in the 15 wells I have drilled over the last 2 years. Please note, the above averages are over the entire Spraberry Trend area. Individual county analysis has identified sweet spots in the trend.

Recent acquisition activity, particularly by Concho Resources and increase drilling by Pioneer ensures this play will remain hot. The economics of the play are important to operators to be in the right areas, to landowners for negotiating leases and damages, and to investors because of the opportunity.