Approach Resources exemplifies Wolfcamp exploitation in West Texas
BY KURT ABRAHAM, EXECUTIVE EDITOR
DENVER -- Perhaps the most exciting, emerging play within the Permian basin of West Texas is the Wolfcamp shale. While there is a tendency to believe that such a play is the domain of large independents and majors, there is also ample room for medium-sized independents to exploit the formation. The personification of this may very well be Fort Worth, Texas-based Approach Resources Inc. The firm, said its president and CEO, Ross Craft, holds about 170,000 gross acres in the Midland basin of the greater Permian basin and is running three horizontal rigs, with plans to go to four rigs. Craft’s comments were made on Tuesday morning, during a URTeC panel group entitled, “Nimble Independents: Moving the Needle with Innovation and Execution Excellence.”
“What makes the Wolfcamp unique,” said Craft, “is its thickness when compared to other plays.” For instance, the heretofore most productive play in the U.S., Prudhoe Bay in Alaska, covers 215,000 acres, with recoverable reserves of 13 Bboe and a recovery factor of 25%. However, explained Craft, “Wolfcamp is 1 million acres and already contains 7 Bboe.” He said this figure assumes that 75% of the acreage can be developed commercially, with recovery rates of 3.5% for oil and 10% for natural gas. Therefore, extrapolating these parameters further, it is not unreasonable, he maintains, to believe that Wolfcamp could become the largest oil and gas discovery/field in U.S. history. “The funny thing is that it was right under our noses the whole time.”
Craft describes the Wolfcamp as “a world class source rock with desirable shale properties and a good thermal maturity window. There are some open/partially open fractures, but the majority is healed fractures. An important feature of the Wolfcamp is that it’s uniform—widespread, thick, consistent and repeatable.” The Wolfcamp features three layers, or “benches”—A, B and C. What was surprising, said Craft, were the characteristics of the C bench. Based on one particular well, the Approach crews soon learned that they needed to drill it 100 to 150 ft deeper, and then the fracs went off without problems, compared to some troublesome results experienced earlier. He said that Approach is using “a Chevron-style, multiple lateral stacking pattern” to get effective frac volumes. The firm is using a range of about 21 to 25 frac stages per well. The company’s production last year was 2.888 MMboe, up 23.5% from 2011’s total. The reserve mix from which production occurred is 69% oil and NGLs, and 31% gas. Total reserves were 24% higher last year, at 95.5 MMboe.
Drilling efficiency is a constant consideration, said Craft. “If you have one rig and 24 wells that need to be drilled on four pads, it will take you a year. But if you can afford to run two rigs, you can drill the first two pads, and then begin fracing the first pad while you drill the last two pads.” In much of its operations, Approach has worked to reduced drilling and completion costs to $5.5 million per well, or lower, while also reducing lease operating expenses (LOE). Craft has also worked to minimize truck traffic and surface disruptions in his firm’s operations while increasing project profit margins.
Summarizing the Wolfcamp’s characteristics, Craft said it is located in a peak oil generation window and an early gas generation window. It has a high density of natural fractures, with 119 to 182 MMboe per 640 acres (one sq mi). Well results are excellent, with an attractive rate of return. He describes the mineral composition and lithology as being similar to the Wolfberry formation and Eagle Ford shale. He also has this bit of advice for people evaluating the play—“Don’t get caught up with IPs; they’re a great form of measurement, but at the end of the day, it’s all about the surface area.”