Operators are making successful vertical wells in an old field in the East Texas Basin just a few counties east of South Texas’ Eagle Ford play. Straddling Madison and Houston counties, Fort Trinidad Field was discovered in 1953 with production from the Upper Cretaceous-age, Dexter-sand member of the Woodbine group and—at about 9,200 feet—the Lower Cretaceous-age Georgetown lime, according to AAPG archives.

An oil-loaded Glen Rose lime discovery was made in 1961 at about 11,000 feet. A discovery in Buda was produced uphole soon thereafter.

Activity in the bustling Fort Trinidad Field declined in time; operators applied for just five drilling permits in 2009. But an uptick in interest, beginning in 2010, led to some 135 permits in 2014 alone, according to Texas Railroad Commission data.

Well results have been compelling and some of the interest has been accelerated by oilfield “close-ology:” EOG Resources Inc. has accumulated acreage in the area, where companies’ lease names include True Grit, Lone Ranger, Josey Wales, Doc Holliday, Sundance and Walker’s Texas Ranger.

One of the biggest acquisitions was in July by Fort Worth, Texas-based Energy & Exploration Partners Inc. (ENXP). It took in some 18,300 net acres in Fort Trinidad Field—all HBP—from TreadStone Energy Partners LLC for $698 million in cash.

A couple of months earlier, Tulsa, Oklahoma-based New Gulf Resources LLC purchased 83,000 net acres in Leon, Grimes, Madison, Brazos and Walker counties from Halcon Resources Corp. for $450 million. Halcon retained its “El Halcon” Eagle Ford play in Brazos, Burleson and Lee counties. New Gulf gained production of 3,600 boe/d, gas-gathering and -processing infrastructure, and new 3-D data over 211,200 acres. With additional leasing, it now has more than 90,000 net acres in East Texas.

The company subsequently sold its Mississippi Lime property in Oklahoma. “We’re now a pure-play, Southeast Texas, Upper- and Lower Cretaceous operator,” said Ralph Hill, New Gulf’s chairman and CEO. Previously president and CEO of WPX Energy Inc., Hill joined the privately held E&P in early 2014.

"We can drill a good number of wells at very economic returns--25%-plus at $50 oil. So we have a great foundation for growth when the price inevitably comes back," Ralph Hill, New Gulf Resources LLC chairman and CEO, said of the Buda-Rose play.

TreadStone/ENXP

The Lower Cretaceous formations—Buda, Georgetown, Edwards and Glen Rose—have long been known to produce from vertical wells. What’s made the series interesting again—and still vertically? Mike Brown, New Gulf’s senior vice president of geology and geophysics, said that, while the formations have been produced from in the past, they were not fully tapped. “In Fort Trinidad Field, the Buda does not give you any mud-log shows to speak of and was often overlooked,” Brown said. “Operators tended to focus on the Glen Rose, leaving the Buda, Georgetown and Edwards behind. Today we are focusing primarily on the Buda, Georgetown and Edwards and adding the Glen Rose when it looks productive.”

Also, seismic-data analysis has advanced during the past couple of decades as well as fracture-stimulation technology, he added. “They’re big drivers in the economics of these plays—the ability to do more, and more cost-effectively.”

Reinvigorated interest in the field’s Lower Cretaceous zones was launched by Navidad Resources LLC, Burk Royalty Co. Ltd. and TreadStone Energy Partners, said Tracy Poole, New Gulf’s president. TreadStone’s start was with some Fort Trinidad Field-area acreage from Newfield Exploration Co. in 2012.

Rolling TreadStone’s position into its own last year, ENXP has some 68,000 net acres in the East Texas Basin, 80% operated, according to its updated S-1 filed in December. Its $84-million, 2015 drilling and completion budget remains focused on vertical Buda-Rose wells with 26 net planned. Its 41 net, vertical Buda-Rose wells in 2014 cost an average of just under $3 million each.

Initially, operators focused on the Glen Rose, leaving the Buda, Georgetown and Edwards behind. "Today we are focusing primarily on the Buda, Georgetown and Edwards and adding the Glen Rose when it looks productive," Mike Brown, New Gulf's senior vice president of geology and geophysics, said.

From TreadStone, ENXP picked up 43.5 net producing wells and 10 waiting on completion. Its own wells, drilled beginning in May 2013 and totaling 48.7 net by the end of this past November, had an average peak gross, 30-day rate of 464 boe/d, according to the S-1/A. The mix is 81% oil and 10% NGL.

Tracy Poole, president of New Gulf Resources, credits TreadStone Energy Partners for its early work in the Buda-Rose. "TreadStone went in and did some early recompletions in existing wells, put a few zones together and said, 'Hey, we can make an economic well vertically.'"

Its 20-month-old Forrest A5, drilled by TreadStone, had produced 396,100 boe, gross, by the end of November; the gross peak 24-hour rate had been 1,852 boe. Its two-month-old Maples 101 had made 11,700 boe by Nov. 30 and had a peak 24-hour rate of 860 boe.

ENXP estimates it has 899 potential vertical Buda-Rose locations in its leasehold, based on 40- to 160-acre spacing, and 251 potential verticals in the Edwards and Glen Rose.

New Gulf’s Poole said, “TreadStone went in and did some early recompletions in existing wells, put a few zones together and said, ‘Hey, we can make an economic well vertically.’”

Horizontal

New Gulf’s position is adjacent west and southwest of the former TreadStone property. “The rock—as we see it in the seismic data—is very analogous. We have fracturing all over our acreage. It gives us a lot of places to try this,” Brown said.

This isn’t New Gulf’s first foray into East Texas. It drilled Woodbine horizontals in the nearby Kurten and Halliday fields beginning in 2009 and sold those in 2012. It has acreage in both fields again. Brown said, “The Buda-Rose was something we had been watching because we had some acreage in Houston County close to TreadStone and some in Fort Trinidad Field, but we didn’t have the seismic data.”

Halcon did have new seismic data. “That’s what brought us back to not only the Woodbine opportunities we know so well, but to the Buda-Rose as well,” Brown said. (For more on the Woodbine, see “East Texas’ Woodbine-Eagle Ford,” Oil and Gas Investor, June 2013.)

The play consists of a vertical well to Glen Rose—at the bottom of the Lower Cretaceous series—and testing that as well as uphole in Buda, Georgetown and Edwards; perforating one, some or all four; and, if in more than one zone, then commingling the production.

“A Buda-Rose well may be producing from one or more of those zones,” Brown said. The company had four of these at press time. “In our initial wells, we are perforating in all four. As we go forward, we may be able to eliminate one or more of them. There is a lot of ‘X factor’ because any of those zones can be a premier producer.”

New Gulf has budgeted a horizontal test for 2015 but wants more vertical tests first and to finish an evaluation of the seismic data to determine how to strike the formations laterally. Matrix porosity in the Buda and Georgetown is typically low—less than 5%—while some intervals can develop porosity of up to 10% in New Gulf’s area.

But these zones are primarily plays on natural fracturing, Brown added. “The fractures are what really drive the productivity.”

Horizontals will mean forfeiting other pay. “What makes this play so nice is that the four zones we commingle all contribute in the vertical. When you go horizontal, you’ll only see one of them. Right now, verticals seem to be incredibly economic—even in a lower oil price.”

Hill noted that EOG is drilling both horizontals and verticals in the play. “They’re directly east of us. They’ve drilled several wells now within a short distance of our leasehold. Some of our areas are going to be better vertically and some are going to be better horizontally. This acreage is new to us. In this low-oil-price environment, it is going to make more sense for us to do more verticals and get more tests.”

EOG Resources

David Tameron, senior E&P analyst for Wells Fargo Securities LLC, reported last summer that the EOG-operated, horizontal McAdams Cattle Co. 1H was completed in Buda in Walker County—at the southern end of Fort Trinidad Field—for an initial production (IP) rate of 1,786 boe/d. There, the pay was 25% oil and 31% natural gas liquids. The well averaged 1,087 boe/d during its first two weeks in flowback. The oil was 49 degrees API.

“Overall, another nice well that serves as a reminder to keep the region on one’s radar,” Tameron wrote. He added that he was receiving a number of questions about EOG’s work in the area. “Based on our digging into available information, we think investor interest is warranted and we expect at least this portion of East Texas to continue to garner interest in coming quarters.”

EOG’s horizontal Vick B 1H in Madison County had an IP of 1,765 boe/d and made 55,000 barrels in its first 30 days online. It was drilled in 2013. That EOG is applying for more horizontal—rather than vertical—permits in the area “provides better insight into the asset’s potential,” Tameron wrote.

The early verticals were science work, he added, “so one shouldn’t read too much into low IP rates on older vertical-completion reports.”

ZaZa Energy Corp., a nonop, joint-venture partner with EOG, reported last summer that its spend on the program would be larger, due to the shift to horizontals. Tameron wrote, “Other tidbits from ZaZa help further assemble a rough sketch of potential activity. Of note: [a] multiyear takeaway contract … with Kinder Morgan, taking steps to add a cryo-plant [and a] 3-D seismic shoot scheduled … .”

Also holding acreage in the area, Perth, Australia-based Sun Resources NL reported in December that EOG’s horizontal Golden Wave Unit 1H was completed in Buda for an IP of 330 barrels of oil in Leon County. The well was made from a pad from which three horizontal, overlying Woodbine wells had been completed for 30-day IPs of between 240 and 420 barrels a day, each.

Potential locations

Hill said New Gulf’s Buda-Rose verticals have cost between $3 million and $3.5 million. Shallower zones are getting two fracture stimulations; deeper zones, three. Proppant is sand. Early indications are that larger fracturing jobs are resulting in better wells. “We just started drilling them, so we’ll be driving those costs down due to scale. And that doesn’t include any inevitable change in oilfield-service costs [due to a low oil price],” he said.

New Gulf drilled more than 30 wells in the area in the past, when it was targeting Woodbine. From Halcon last year, it gained 82 producing wells. Since the acquisition, it has drilled nine—the four verticals and, the balance, horizontal Woodbines in the northern part of its leasehold.

Its average working interest is 73% and it operates 95% of its position. Source rock for the Buda is Eagle Ford.

“It’s very exciting for us,” Hill said. “We can drill a good number of wells at very economic returns—25%-plus at $50 oil. So we have a great foundation for growth when the price inevitably comes back.”

He estimated New Gulf has more than 1,000 locations. “And that number will grow.” The estimate is based on 80-acre spacing in the vertical Buda-Rose program, which might be reduced to 40 acres.

Poole likens the play to the early, vertical examination of the Wolfcamp in the Permian Basin. The wells were economic in part by commingling production from the Spraberry. “And then you had hundreds of wells, which gave the operators the appropriate data points to go sideways,” he said.

“Our desire to go sideways in certain zones will be driven by the data, and we’ll have successful horizontals in addition to our deep inventory of verticals.”

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