• It takes big stimulation muscle—and dollars—to exploit the deeper, hotter Mississippian play.
  • Weak commodity prices will cool the pace of activity in second-half 2017.

There have been some blockbuster E&P mergers in the Anadarko Basin over the last year. The latest involves the LINN Energy Inc. and Citizen Energy II LLC’s joint combination of 140,000 net acres into Roan Resources LLC, which places an exclamation point on why the Anadarko Basin is one of the nation’s hot spots.

The No. 1 Anadarko narrative involves the migration to Mississippian-era targets west of Oklahoma City. Call it SCOOP, call it STACK, call it SCORE: when it comes to branding plays, it’s hard to beat the creativity of Oklahoma E&P companies. All of them involve some variation on Upper or Lower Mississippian stacked targets.

Mid-year observations from the field show persistent demand for well stimulation services, though oil prices below $50 will temper the pace in second-half 2017. Respondents to Hart Energy’s Heard in the Field surveys noted the market needs $52.75 West Texas Intermediate and $3.19 natural gas for demand growth to continue, which is about 10% higher than commodity prices in early July.

“We are booked eight to 12 weeks ahead right now,” a sales representative from a mid-tier pressure pumper told Hart Energy. “We would love to add a fleet but not until prices recover.”

E&P companies are working down the inventory of drilled but uncompleted wells even as they complete newly drilled wells on the same pad. Zipper fractures constituted 74% of completions in second-quarter 2017, up from 65% one year ago.

Crowd-sourced averages for Midcontinent activity in second-quarter 2017 include 38 stages and 2,172 m (7,125 ft) for horizontal laterals in the SCOOP/ STACK and 29 stages and 1,676-m (5,500-ft) laterals in the shallower Mississippi Lime play.

Some E&P companies report using up to 20 million pounds of proppant per well on closer staging, although crowd-sourced volumes averaged 19.25 million pounds in the SCOOP/STACK with some resin-coated proppant and 15.6 million pounds of mostly 40/70 and 100 mesh sand elsewhere.

Price per stage regionwide was $63,500 at mid-year vs. $58,750 in first-quarter 2017. However, leading- edge price per stage was above $100,000 in the SCOOP/STACK because of deeper, hotter wells; hybrid gel completions vs. slick water; a larger package of equipment onsite rated to 15,000 psi vs. 10,000 psi elsewhere; and the growing use of diverters on closer stage and cluster spacing. Respondents cited average 61-m (199-ft) spacing between stages, down from 75 m (246 ft) one year ago.

Pricing for oil services was flattening at mid-year after a sharp jump dating back to fourth-quarter 2016. Well stimulation service providers expect flat pricing in third-quarter 2017 because of commodity price weakness.

Elsewhere, demand for drilling rigs rose 7% sequentially in second-quarter 2017, though drilling contractors expect the rate of change to slow in the third quarter. Large public independents led demand for higher specification drilling rigs followed by private-equity-backed privately held firms with drilling obligations on newly acquired acreage. Plus, the region still features joint ventures in which companies must drill to earn the full right to properties.

Rig rates were up 6% on average to $17,300 sequentially in second-quarter 2017 for the benchmark 1,500-hp AC-VFD Tier I rig, although contractors cited pricing from $15,000 to $19,500 per day, mostly on well-to-well work.

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