After closing in March on a $215 million purchase of 130,000 net acres from Samson Resources II in the Powder River Basin, Oklahoma City-based Continental Resources Inc. plans to do what it typically does in new plays: apply what the company has learned elsewhere and take reservoir performance to the next level, says President and Chief Operating Officer Jack Stark.
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Armed with 96 approved federal drilling permits, Continental, which will spend approximately $80 million in the Powder River this year, is deploying two rigs to begin delineating and developing the Shannon, Frontier and Niobrara reservoirs in Campbell, Converse and Johnson counties, Wy., he details. Future targets include the Sussex, Mowry and Muddy formations.
Multiple stacked reservoirs, within a 5,000-foot interval, are 70%-80% oil and in the early stages of development, Stark says. The acquired acreage is 80% held by production and came with 9,000 boe/d in production.
“When you step back and take a look at the properties, three out of the top five oil-producing wells in the basin are located within our acreage block, all with 30-day IPs of more than 2,000 boe/d, and two of those were operated by Samson,” he points out.
The Ogalalla No. 40-75SH posted an IP of 2,235 boe/d (94% oil) and the Spearhead 75SBH produced 2,184 boe/d (98% oil), both from the Shannon, according to company information.
Well construction is similar to properties in the Bakken and Oklahoma, says Pat Bent, senior vice president of operations. True vertical depths range from 10,500 to 13,500 feet with two-mile laterals and the potential exists for longer ones utilizing the same technologies and approaches, he adds.
“Our long history of operational excellence in all of our operating basins gives us the confidence to be best in class. This is another opportunity to deploy that capability,” Bent says.
During the first quarter, Continental worked to integrate operations with plans to deploy the first rig in May and the second in June, he says. For the year, 15-17 Powder River wells will be spudded with up to 10 completions in the play, he elaborates.
Despite the BLM permit freeze, Continental’s leadership does not see impediments to drilling, he says, and is encouraged by recent permit approvals.
Continental will continue to rely on steadfast, repeatable performance in the Bakken, where the company plans to spend 60% of its $1.1 billion drilling and completion budget, Stark says. “Bakken performance has probably the best repeatability of any play in the country right now, and we are very pleased with what we have there,” Stark says.
Continental has enough overall drilling inventory to grow the company at a 5% compounded annual growth rate over the next 10 years considering its holdings in the Bakken, Oklahoma and now the Powder River, he says.
The company already has lowered debt beyond initial guidance, to $4 billion from $4.5 billion announced earlier, Stark says. About 58% of cash flow scheduled for reinvestment, including 35% in the Oklahoma SCOOP play, where the company’s SpringBoard projects are on track, he says.
“We are an exploration company and SCOOP is an example of that, and so is our core position in the Bakken,” Stark says. “The reason we have such sustainable and repeatable results is because with the geology and our early entrance, we have a huge position in the core of the assets.”
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