Strawberry Fields Forever?
When it comes to developing the Spraberry field in West Texas, Pioneer continues to rewrite the book. In the past we have discussed the Spraberry field and how the addition of the Wolfcamp lead to the “Wolfberry” play. Now it appears the Strawn formation is being added below the Wolfcamp and the results are encouraging…thus the “Strawberry” is born.
Pioneer plans to drill 440 wells in their Spraberry/Wolfberry/Strawberry play in 2010. This is up significantly from their earlier estimate of 125 well. Of the wells remaining to be drilled in 2010, approximately 40% will be drilled down to the Strawn. Pioneer reports wells that have included the Strawn with the Spraberry and Wolfcamp have seen an increase of 20-30% in their IP rates above the average of 60 barrels of oil equivalent per day (BOEPD).
This increase in IP is significant because it allows for the faster recoupment of the investment, which increases the rate of return of the project. I have not seen any numbers reflecting the increased reserves associated with adding the Strawn, so I cannot comment on the affect the Strawn will have on the overall finding costs. Let’s hope the Strawn’s reserves can support the additional costs associated with drilling deeper and adding stages to the frac job.
The Spraberry, and Wolfberry, and no doubt Strawberry plays have always been very sensitive to developments costs. Pioneer has addressed this aspect by not only the sheer volume of development activity, but by also providing their own services. They currently plan on providing 30-60% of their own services internally by 2012. Pioneer is increasing the company-owned frac fleet from one to four, and the number of company-owned drilling rigs from six to twelve.
The results speak for themselves. Pioneer reports an average gross investment of only $1 million for the wells drilled in the first half of 2010 and an associated rate of return of 50% (BFIT). How much of these results include the Strawn is unknown, but if they can consistently increase their IP by 20-30% and continue to hold development costs down, the Strawberry Fields may continue for some time—but forever?
