SCOOP Play Catches Investors Attention

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Continental Resources (NYSE: CLR) is bullish on the Woodford Shale in a new area in Oklahoma and plans extensive development of this oil and liquids formation through 2017.  The program is a key part of the company’s plan to triple oil and gas production and proved reserves over the next five years.

Five Year Growth Plan

Continental Resources held an analyst day on October 2012 and unveiled a five year plan to triple oil and gas production and proved reserves.  This plan would increase production to approximately 296,000 barrels of oil equivalent (BOE) per day in 2017, compared to production of 98,000 BOE per day expected in 2012.

Proved reserves would also triple under this program and reach 1.52 billion BOE at the end of 2017.  This compares to 508 million BOE reported at the end of 2011 and 610 million BOE reported at the end of the second quarter of 2012.

SCOOP Play

Continental Resources is highlighting the Woodford Shale in the South Central Oklahoma Oil Province (SCOOP) which begins south of Oklahoma City and runs close to the Texas border.  The shale comprises approximately 3,300 square miles and is present in portions of Grady, McClain, Garvin, Stephens, Canadian, Love and Caddo Counties.  Other operators refer to this area as the South Cana Woodford play. 

Continental Resources said that the Woodford Shale in this area is present at depths ranging from 8,000 to 16,000 feet deep and is approximately 150 to 440 feet thick.  The shale has a total organic content ranging from 6% to 12% and a porosity from 5% to 8%.     

Continental Resources has been aggressively leasing acreage here and has 170,600 net acres under lease, compared to only 94,000 net acres at the end of 2010. 

Recent Activity

Continental Resources has been involved with 35 wells to date in the area and estimates that it has derisked 600 square miles.  The company has delineated the Woodford Shale in this area into an oil window and a condensate window.  Initial production results in the oil fairway range from 626 to 670 BOE per day, with an 80% to 86% liquids content.

Wells in the condensate fairway produce more oil and gas, but have more non liquids content.  The company reported initial production rates here ranging from 808 to 1,771 BOE per day, with liquids content from 55% to 61%.   

Continental Resources estimates that oil fairway wells will have an estimated ultimate recovery (EUR) of 626,000 BOE and that wells in the condensate window will have a EUR of 1.2 million BOE.

Other Operators

Although there are a number of other operators active in the Woodford Shale, it’s not clear if their leasehold extends to southern Oklahoma. 

Devon Energy (NYSE: DVN) has 244,000 net acres exposed to the Woodford Shale with the leasehold spread throughout Oklahoma.  The company estimates that 40% of its production will be liquids in 2012 and there are 3,000 drilling locations in the oil and liquids fairway.

Cimarex Energy (NYSE: XEC) has 120,000 net acres prospective for the Woodford Shale with approximately 75,000 net acres in areas with a high oil and liquids content.  The company is currently conducting infill drilling in these areas and estimates that it has 700 future drilling locations here.

Marathon Oil (NYSE: MRO) has 163,000 net acres under lease and is currently operating two rigs in the Woodford Shale.  The company cut its capital budget in August 2012 and reduced activity in this play.  Marathon Oil has tried to increases its oil and liquids production in the Woodford Shale but is still producing mostly natural gas from this play.

QEP Resources (NYSE: QEP) has 75,600 net acres and estimates that 75% of this acreage is in the liquids portion of the Woodford Shale. The company expects to complete 14 operated wells here in 2012.

Continental Resources is already the leader in the Bakken and it looks like the company may repeat that success in the developing Woodford Shale in a new area in Oklahoma.


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