Strawberry Fields Forever?

Posted on August 26, 2010 by Mike Markes

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?
 

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Wolfberry: A West Texas Resource Play

Posted on January 23, 2010 by Greg McFarland

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.

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