[Editor's note: A version of this story appears in the January 2019 edition of Oil and Gas Investor. Subscribe to the magazine here.]

The old is new once again in the western Anadarko Basin that straddles the state line between the Texas Panhandle and western Oklahoma. Privately held independents are applying super-extended laterals and multistage, high-intensity completions to revive a quasi-unconventional resource play.

The current revival is the latest in a province that has witnessed almost 45,000 wells during the past 100 years and generated 15 trillion cubic feet of gas—much of it liquids-rich at 1,250 to 1,350 British thermal units—and 300 million barrels (bbl) of oil.

The western Anadarko is home to two hydrocarbon plays. The gas-rich Granite Wash is characterized by debris fans along the forefront of a geologically ancient mountain front. The second occupies a shallow shelf pro-grading south and west into the ancient basin and is characterized by a liquids-rich gas and black-oil play.

Combined, these make the western Anadarko a stacked-pay play with up to 26 formations that demonstrate hydrocarbon potential in Pennsylvanian-aged formations.

Tulsa-based Tecolote Energy LLC spent $260 million beginning in 2016 to acquire 210,000 HBP acres, mostly along a diagonal front about 60 miles long in Hemphill and Wheeler counties in the Texas Panhandle and in Roger Mills, Custer and Beckham counties in Oklahoma, essentially paying PDP (proved developed producing) values for cast-off acreage from Devon Energy Corp. (NYSE: DVN), Samson Resources Inc. and Chevron Corp. (NYSE: CVX).

Currently, Tecolote’s 245,000 acres feature working interest above 82%. Internally, the company incorporated 10,000 wells, assimilated hundreds of miles of 3-D seismic and thousands of drilling logs into a coherent database allowing engineers to suss out the best landing zones and completion techniques.

Tecolote is going long, emphasizing 10,000-foot laterals and adopting completion-intensity techniques from other resource basins. The company employs 1,500 pounds of sand and 2,100 gallons of fluid per lateral foot, while decreasing stage-spacing from 300 feet to 180 feet.

Tecolote generated four of the 10 best horizontal wells among its first six efforts in Hemphill County, Texas, including a record-setting-lateral-length Mathers State 172-156 CL EX 1H at 12,592 of horizontal displacement with a 30-day cumulative production of 35,015 bbl of oil.

The offset Mathers 1518-165 EX 1H was completed at 2,320 barrels of oil equivalent (boe/d) out of a 7,257-foot lateral in the Marmaton D zone. Employing a branding technique common to Oklahoma E&Ps—originators of the Cana Woodford, Scoop and Stack plays—Tecolote christened the effort as the Panhandle Oil Window, Extended Reach play—the “Power Play.”

Company CEO Maurice Storm told attendees at Hart Energy’s DUG Midcontinent Conference in November that the Granite Wash is among the best zones in barrels of oil equivalent (boe) per thousand feet of lateral in the Anadarko Basin on 12-month cumulative production. This metric represents 44,000 boe per thousand feet of lateral and has only been exceeded recently with newer Anadarko Basin wells farther east, in the Scoop-Woodford play.

VIDEO - 2018 DUG Midcontinent Private Operators Panel: Tecolote Energy, Canyon Creek Energy and Presidio Petroleum (requires subscription)

Tecolote is pursuing a two-rig program to drill three well pads separated by step-outs 15 to 20 miles apart. Production was expected to exceed 30,000 boe daily by year-end 2018.

Tecolote is just one player in a broader story. FourPoint Energy LLC has amassed more than 750,000 acres and employed big-data analytics and extended-reach laterals to achieve economically positive results in the western Anadarko. Meanwhile, start-up Presidio Petroleum LLC has acquired 60,000 acres in the Oklahoma Panhandle to exploit the Cleveland, Tonkawa and Marmaton on the shelf section of the western Anadarko.

The western Anadarko suggests there is still a future for smaller independents within a broader industry trend that emphasizes consolidation as the main avenue to exploit resource plays.

The latter may be the case in theory. However, the reality in the field is that technically astute management teams who employ the latest well-construction learnings are picking up cast-off acreage at PDP valuations, obtaining PUDs (proved undeveloped reserves) for little to no cost, and squeezing hydrocarbons out of formations that were originally developed under older methodologies.

These independents find the western Anadarko attractive with pre-existing infrastructure for access to hydrocarbon-processing and to the larger, national marketplace.

The king—in the form of larger, publicly held operators—may be dead in the western Anadarko. But, long live the privately held, smaller-firm “king” that is ascending the throne.

Richard Mason can be reached at rmason@hartenergy.com.

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