TUSLA, Okla. – Predictable, repeatable and oil were three of many descriptors often applied to the Mississippi Lime play in 2010 and 2011, according to Gibson Scott, director of energy research for ITG Investment Research. But now? Words such as complex, variable and NGLs dominate conversations about the play.

“It is pretty clear that the industry’s understanding, and by virtue of that, investors’ perceptions of the play have changed over time,” Scott told attendees at Hart Energy’s DUG Midcontinent conference on March 3 in Tulsa, Okla. “Key themes that Mississippi Lime operators and investors face today include the variability of performance, how geologic indicators may be used to determine sweet spots in the play, and how completion designs differ by operator.”

In compiling the analysis of the play for the conference, the ITG team looked at oil production data taken directly from production reports of more than 1,000 Oklahoma and Kansas wells. Public operators included in the analysis were Chesapeake Energy, Devon Energy, Midstates Petroleum, Range Resources and Sandridge Energy.

“Few plays are as geologically complicated – or found in jurisdictions with data qualities as challenging – as the Mississippi Lime play in Oklahoma and Kansas,” he said. “We spent a great deal of time collecting, parsing, scrubbing and analyzing oil production data directly from production reports rather than the state data.”

These well production reports provided many key insights. Take, for example, variability in well performance across the play. It is driven by both geology and operator completion designs, Scott said.

Noting that the data showed a general trend to oilier production moving east across the Nemaha outlet, he added that the hydrocarbon mix is extremely variable, even across short distances. “The geology of the Mississippi Lime itself is extremely complex,” he said. “Often a single lateral may encounter limestone, dolomite and chat.”

It is due to this variability that most operators tend to focus on discrete regions of the play, he said, with small programs varying widely from the mean. Plotted out, the well data showed that Midstates Petroleum achieved the highest per well oil productivity of the group, about 200 bpd on average.

“Sandridge and Midstates have drilled some of the best performing individual wells within our sample,” Scott said. “In fact, several wells drilled in Grant, Woods, and Alfalfa counties produced over 1,500 bpd during their peak month.”

High-rate wells, or those wells that produced more than 1,000 barrels per day during their peak month, showed a steep decline profile, Scott noted, with production from an average high-rate well falling 90%.

“Overall, we observe a peak calendar month IP to EUR relationship of about 1 to 600, which indicates that the Mississippi lime average well, or at least its oil production, tends to decline more steeply than some of the other resource plays we look at,” he said.

The completions process also can have an impact on the performance of Mississippi Lime wells. “Given the geologic variability of the plays, it’s pretty unlikely that one practice would fit all regions,” he said. “We believe that operators will have to tailor their specific approach to their own respective areas.”

The typical Mississippi Lime well today is drilled with about a 4,000 feet (1,219 meters) lateral, up from 2,500 feet (762 meters) in 2009, he said. About a million pounds of sand was typically used in these wells, a figure that has remained pretty consistent over the past three to four years.

“Chesapeake historically used the most proppant in its completions,” he said. “In fact, Chesapeake has decreased its sand volumes each year and is now more in line with Sandridge’s at about 700,000 pounds of sand. This doesn’t appear to have materially impacted its test rate, which actually climbed over time.”

The analysis found that the average Mississippi Lime well recovers about 97,000 barrels of oil, with Alfalfa and Woods counties exhibiting best-in-class peak oil rates and recoveries, Scott said, adding that activity here is dominated by Chesapeake, Midstates and Sandridge.

“In terms of Chesapeake specifically, its activity is really concentrated in Alfalfa and Woods counties, where it’s achieved a three-year average oil recovery of over 120,000 barrels,” he said. “We estimate that Chesapeake’s most recent wells recover over 130,000 barrels of oil.”

Woods and Alfalfa counties are home to most of Midstates’ activity, he noted, adding that while its oil recoveries have deteriorated they still remain among the best-in-class for Mississippi Lime operators.
Devon’s activity spans five counties focused east of the Nemaha outlet, according to Scott. “Although production east of the Nemaha is generally oilier, oil recoveries tend to be lower,” he said. “We estimate Devon’s most recent wells recover about 60,000 barrels of oil with its best results coming from Payne and Noble counties.”

Range Resources’ activity also is concentrated east of the Nemaha outlet and is similar to Devon in its production results. Its wells tend to be oilier and also tend to recover less oil, according to Scott. “We estimate that Range’s Mississippi Lime wells recover about 70,000 barrels of oil on average.”

With activity in 16 of 22 counties, Sandridge is the more widely distributed operator across the play. “Alfalfa, Harper and Grant are among its best performing counties,” he said. “Sandridge also has exposure in Sumner County, Kan., which may identify as being an emerging and a potential new core area. Our average Sandridge curve, which includes their exploratory and extensional acreage, recovers 99,000 barrels of oil over a 30-year well life.”

While performance across the play varies widely, Scott noted that operators like Sandridge are able to gain a competitive advantage through large statistical programs, established infrastructure and cost-saving measures. Companies like Midstates were dealt a better hand geologically, but each company will have to tailor its own drilling and completion designs for its respective areas, he said, adding that “we’re still on the learning curve in terms of what’s going to work best in each area.”

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