The productive Cleveland formation is a fine-grained, tight Upper Pennsylvanian-age sandstone reservoir covering an area of more than 650 square miles in the northeastern Texas Panhandle and western Oklahoma, in the Anadarko Basin. It was deposited as a series of fluvial-deltaic sand packages, primarily interbedded with shales.

The Cleveland produces from depths generally between 6,500 and 8,500 feet. Porosity ranges between 4% and 14% and permeability between 0.03 and 1.1 millidarcies. Traps are typically combination, with minor structural component.

The largest fields include Ellis Ranch, with 329 billion cubic feet equivalent (Bcfe) cumulative production in Ochiltree County, and Bradford (280 Bcfe), Mammoth Creek North (187 Bcfe) and Lipscomb (117 Bcfe), in Lipscomb County.

Initial Cleveland development began in the 1950s with vertical drilling. Although there is great variability in estimated ultimate recoveries (EURs), typical vertical well recovery is in the 0.7 Bcfe range. In Lipscomb, Hemphill, Ochiltree, Roberts and Hansford counties in Texas, and Ellis County in Oklahoma, 2,158 vertical Cleveland producers have been drilled. Cumulative production is 1.1 trillion cubic feet (Tcf) and 28.9 million barrels of oil.

Horizontal activity. As with many mature plays that have been developed with vertical wells in the past, in recent years horizontal drilling has revitalized, and now dominates, the play. Since 2004, 770 horizontal wells have been drilled in this area with cumulative production of 287 Bcf and 17.6 million barrels of oil through 2010.

Since 2004, the number of vertical wells drilled yearly has declined, while the number of horizontal wells drilled annually has steadily increased to a peak in 2008 of 176 wells, with 96 laterals drilled in 2010.

While historically the Cleveland has been a tight-gas play, in recent years operators have focused on oil-prone areas. These areas include parts of south-central Ochiltree County, north-central, south-central and southwestern Lipscomb County, and central Ellis County. The number of oil wells has increased since 2004, coincidentally with the escalation of horizontal drilling, and has equaled or outpaced the number of gas wells drilled annually in the play since 2007.

As with other resource plays using horizontal drilling, well design and completion optimization have evolved. Initial laterals were generally less than 2,500 feet in length. Typical horizontal wells now have laterals that are 4,000 to 4,600 feet long, oriented north to south.

Average EURs for laterals drilled in 2004 are approximately 300,000 barrels of oil equivalent (BOE). EURs appear to have increased to more than 400,000 BOE for 2010 horizontals using more optimal drilling and completion design. Economics are very strong at current prices for a 400,000-BOE well with a drill-and-complete cost of about $3 million.

Cleveland players. The most active operators in the play include BP Plc, Chesapeake Energy Corp., EOG Resources Inc., Holmes Exploration LLC, Jones Energy Ltd., Mewbourne Oil Co. and Noble Energy Inc., but numerous other operators are active there as well.

Chesapeake, with some 500,000 net acres in the play, plans to average nine rigs in the Cleveland/ Tonkawa play and drill approximately 85 net wells in 2011. EOG, with 60,000 net acres, reported in 2010 that its horizontal drilling and enhanced completion technology has increased the EURs per well in this play by a factor of four over its previously drilled vertical wells. Jones Energy holds more than 90,000 gross acres and plans 48 Cleveland wells in 2011. Jones has been an active acquirer in the trend, with two transactions in 2010.

As companies look to increase their oil weighting in the current price environment, the Cleveland trend is certain to see additional transaction activity.

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