Coterra Energy Inc. (NYSE: CTRA) (“Coterra” or the “Company”) today announced its financial and operating results for the second quarter of 2024, highlighting exceptional production and financial performance. The Company reported total production, including natural gas and oil, exceeding the high end of guidance, while capital expenditures remained near the low end. Additionally, Coterra declared a quarterly dividend of $0.21 per share and provided updated guidance for the third quarter and full year 2024, reinforcing its commitment to operational excellence and shareholder returns.
The Windham Row Development, as detailed in Coterra’s earnings presentation, represents a significant advancement in the company’s strategic approach to optimizing oil and gas production. This 54-well project, spanning six drilling spacing units (DSUs), leverages simultaneous operations (Simul-Ops) and simul-fracking to enhance efficiency, reduce costs, and accelerate production timelines. With a focus on centralized facilities and infrastructure, the project is expected to deliver substantial cost savings while paving the way for future developments. This summary highlights the key aspects of the Windham Row Development, showcasing its potential to transform Coterra’s operations in Culberson County.
Project Scope
- Total Wells: 54 wells spanning six drilling spacing units (DSUs).
- Well Distribution: 7-10 wells per section in the Upper Wolfcamp and four wells per section in Harkey.
- Simul-Ops Efficiency: Utilizes simultaneous operations (Simul-Ops) to improve efficiency by drilling, completing, and bringing wells online simultaneously. This approach reduces cycle times and smooths production.
- Simul-Frac Operations: Approximately half of the wells will undergo simul-fracking, reducing costs and accelerating production.
Facilities and Infrastructure
- Primary Focus: Upper Wolfcamp, with three Harkey wells co-developed on the western side.
- Centralized Facilities: Large, centralized facilities that can be leveraged across multiple leases and future developments in other zones like Harkey or Lower Wolfcamp.
- Pad Operations: Centralized pad operations with only 1-2 pads per DSU.
Cost Savings
- Projected Savings: Windham Row is expected to cost 5-15% less than the average cost per foot in Culberson County.
- Cost Drivers: Reduced facilities and infrastructure needs, use of simul-frac, and centralized pad operations.
Development Timeline
- Initial Wells Online: June 2024.
- Full Development Online: Throughout 2024.
- Phase 2: Development of the remaining Harkey wells, expected to begin within approximately 12 months after Phase 1 is fully online.
Simul-Frac Operations
- Efficiency Exceeding Expectations: Simul-frac operations have exceeded expectations, contributing to early well performance and project expansion.
- Well Performance: 21 of the planned wells came online an average of 4 days ahead of schedule.
- Project Expansion: Coterra plans to add three additional Harkey wells, bringing the total to 57 wells.
- Simul-Frac Plans: 45 of the 57 wells will undergo simul-frac, further improving capital efficiency.
Simul-Ops (Simultaneous Operations)
- Efficiency Improvement: Reduces cycle times and smooths production compared to traditional row development. This strategy was previously tested on the 23-well Mint Julep project in 2023.
- Application in Windham Row: Enhances efficiency and includes testing simul-frac on roughly half of the wells.
- Cost Savings: Driven by centralized pad operations and reduced infrastructure needs. Simul-frac enables dual well completion with a single crew, speeding up the process and lowering the cost per foot.
Facilities Optimization
- Infrastructure Needs: Focus on the Upper Wolfcamp, with centralized facilities that can be used across multiple leases and future developments.
- Centralizing Operations: 1-2 pads per DSU, reducing infrastructure needs and costs.
- Infrastructure Strategy: Saves on pipeline and facility size due to staggered first production timing from Simul-Ops and flexibility to co-develop or return to other benches later on.
In conclusion, the Windham Row Development exemplifies Coterra’s innovative approach to enhancing operational efficiency and reducing costs through strategic use of Simul-Ops and simul-frac techniques. By focusing on centralized facilities and infrastructure optimization, the project not only achieves significant cost savings but also sets a new standard for future developments in Culberson County. The early success and planned expansion of the Windham Row project underscore its potential to drive sustained production growth and operational excellence for Coterra. As the initial wells come online and the project progresses, Coterra is well-positioned to capitalize on these advancements, reinforcing its commitment to efficiency and cost-effectiveness in the oil and gas industry.
