A sweet spot in the Texas Panhandle and western Oklahoma offers high-volume wells from the Pennsylvanian zone in an area of stacked plays.

Unocal kicked off the Granite Wash play with a well at Lard Ranch in 1956, but its potential came on strong in recent years as key operators graduated horizontal drilling and low-cost operating procedures.

Apache Corp.
Apache Corp., piling up gains from its long experience in western Oklahoma, increased its activity in the Granite Wash in the Anadarko Basin.

It October 2009, the company reported production of 17 MMcf/d of gas and 800 b/d of liquid hydrocarbons from its Hostetter #1-23H well in Washita County, Okla.

Although the company drilled more than 100 successful vertical Granite Wash wells between 2004 and 2009, this was its first operated horizontal well in the play.

It drilled the well to 12,500 ft, including a 4,000-ft horizontal leg, and completed the well with an eight-stage frac treatment.

The company, as operator, holds a 72% interest in the well.

According to Rob Johnston, central region vice president for Apache, “Apache controls more than 200,000 acres across the play, primarily held by production. The Granite Wash stacked sandstones extend more than 100 miles across western Oklahoma and the Texas Panhandle. Apache has drilled hundreds of vertical wells across the play, and horizontal drilling technology has unlocked hundreds of additional opportunities in Apache's acreage.”

Johnston added, “The high liquid hydrocarbon content makes the play especially attractive in the current environment of low natural gas prices.”

The Hostetter well won't be the company's last horizontal test. It planned to drill four additional horizontal wells to the Granite Wash during 2009 and add another 20 horizontal wells be the end of 2010.

Apache participated in horizontal wells in 2009 with a non-operated interest. It encountered production rates of more than 10 MMcf/d of gas in that participating effort.

As early as 2006, according to an Apache report titled “Back to the Future,” the company planned 20 wells at Stiles Ranch Field as part of an aggressive drilling program “tapping long-overlooked Granite Wash and Atoka Wash formations.”

Stiles Ranch is immediately west of the 100th meridian, which divided the Texas Panhandle from Oklahoma. Its staged fracture technique brought gas to market a month faster than conventional completions at lower cost, the company said. The technique shaved some US $500,000 off the cost of each Stiles Ranch well.

That aggressive program allowed Apache to double its production from the area in four years. Previously, the company had struggled to maintain production levels drilling 20 wells a year.

In 2009, the company planned but canceled its 2024 Stiles 24 well in its Stiles Ranch Field in Wheeler County in the Texas Panhandle.

It projected that development well to 18,000 ft in the Des Moinesian Granite Wash about six miles northeast of Kelton, Texas. This proposed well was the former Apache 2-24 vertical well. That well was completed in 2004 for 42 b/d of condensate and 1.28 MMcf/d of gas, from three Granite Wash zones and one Atoka zone, according to IHS Inc.

In March 2009, Apache completed the 101 J.H. Hill vertical delineation well, also in Wheeler County, with an initial potential of 7.16 MMcf/d of gas, 71 b/d of condensate, and 22 b/d of water through a 30/64-in. choke. That well produced from Granite Wash and Atoka perforations between 12,955 and 14,905 ft with 3,113 psi of flowing tubing pressure and an absolute open flow potential of 128 MMcf/d of gas.

At that time, Apache had work in progress on 15 prospects in Wheeler County and had staked locations for another 15 tests.

In an October presentation, the company said it was the third-largest producer in Oklahoma and the fourth-largest producer in the Permian Basin.

Asher Resources Partnership
Asher Resources Partnership of San Antonio, Texas, holds properties in the Texas Panhandle segment of the Granite Wash play.

The company canceled its permit for the 2 Mamie Pearl Risley well in Hemphill County in the Texas Panhandle during the past year.

It had planned to drill the well to Granite Wash at 11,400 ft about 11 miles south of the town of Canadian. That was a planned redrill of a former Atlantic Richfield well that reached Granite Wash at 9,000 ft. in 1974. According to IHS Inc., that well showed an initial potenital of 29 MMcf/d of gas through Granite Wash perforations between 10,728 and 10,948 ft.

Asher also listed Granite Wash properties for sale through the Oil & Gas Clearing House Nov. 11, 2009, sale.

BP America Production Co.
BP holds extensive acreage throughout the prolific Texas Panhandle with access to multiple producing formations in the regions stacked pay zones.

The company doesn't publicly break out its acreage or production numbers for the area, but participation in fields shows up on Texas Railroad Commission records.

For October 2009, for example, the company received pro-ration allowances from the commission for its Hemphill Field Granite Wash oil production in Hemphill County. It also received pro-rationing allowances for its Northwest Mendota Granite Wash Field in Roberts County. The company also had allowances set for St. Clair Granite Wash Field, also in Roberts County.

A notice on Amarillo.com offered an example of the company's history in the region and an example of the life of Granite Wash wells. It said the company plugged the #1 Jameson Gas Unit in Northwest Mendota Field on Jan. 20, 2009. A drilling rig spudded that 10,913-ft well on Sept. 28, 1980.

Brigham Exploration Co.
Brigham Exploration Co. sold off its Granite Wash properties in September of 2007, but it hasn't abandoned the play. It continues to hold extensive properties in the Williston Basin and considers the formation important as it targets the stacked plays in the basin.

According to the company's annual report and its assessment of the Anadarko Basin properties, “We believe this prolific natural-gas-producing province offers a combination of relatively lower risk exploration and development opportunities in shallower horizons as well as higher risk, but higher reserve potential, opportunities in the deeper sections that have been relatively under explored.”

At that time, the company's recent activity was aimed at the Hunton, Springer Channel, Springer Bar, and Granite Wash zones.

At the same time, Brigham said the company did not anticipate any drilling in the basin during 2009 as it concentrated its efforts on the prolific Bakken play in North Dakota and its properties in South Texas and southern Louisiana.

The company sold its specifically designated Granite Wash properties in September 2007 for US $35.4 million.

At the time, the properties produced a net 1.8 MMcfge/d and the company held 23.5 Bcfge of net proved reserves on property that was 78% undeveloped.

Centurion Resources LLC
Centurion Resources LLC, one of the smaller operators in the Granite Wash play, was founded in August 2002, by Bruce Randall, former executive with Helmerich & Payne.

The company concentrates its activities in the panhandle regions of Texas and Oklahoma, which also is the focal area for the Granite Wash.

The company currently holds interests in more than 100 wells and operates about two-thirds of the properties with its five employees.

Among the properties listed by the Texas Railroad Commission in which the company has an interest is the Abraham Granite Wash Field.

Chesapeake Energy Corp.
Chesapeake Energy Corp.'s number one or number two position in four of the top gas shale plays in the US — Marcellus, Haynesville, Barnett, and Fayetteville — sometimes masks its leading position in other prime plays, including the Granite Wash.

In spite of weak natural gas prices, the company remains the most active driller in the country, accounting for one out of every seven gas wells drilled.

According to a November 2009, company presentation, it operated 105 rigs, down from 158 in August, 2008, worked with another 70 non-operated rigs and accounted for another 15 rigs gathering information.

Among those operated rigs, 93% worked the four major shale plays and the Granite Wash. Gas prices clearly are lower, but, according to Chesapeake, drilling costs had dropped 30% to 50% and funds from its partnerships that carry Chesapeake's drilling costs drilled more wells.

While the shales continued to generate the big news, the Granite Wash generated the big returns in Chesapeake's portfolio in late 2009.

Chesapeake held two main Granite Wash properties, the Colony Granite Wash project and the Texas Panhandle Granite Wash project.

Colony, in Custer and Washita counties in Oklahoma, contained some 60,000 net acres with 337 Bcfge in proved reserves, 1 Tcfge in risked unproved reserves, and 110 MMcfge/d in production. The company had five rigs working that project at the end of September, 2009. Chesapeake was the largest leaseholder and most active driller in that play.

The Texas Panhandle project encompassed 40,000 net acres in Hemphill, Wheeler and Roberts counties in Texas and Roger Mills County in Oklahoma with 439 Bcfge in proved reserves, another 400 Bcfge in risked unproved reserves, and 75 MMcfge/d of production with two rigs working. Chesapeake was one of the largest leaseholders in that area.

Although those two areas were the company's most active projects, overall it was that largest overall leaseholder in the greater Granite Wash play with approximately 350,000 acres.

The attraction is easy to see. In late 2009, the company's best shale play, the Marcellus in Appalachia, offered a 66% return at a natural gas price of US $7/MMBtu and an oil price of $70/bbl. Chesapeake's Colony Granite Wash project offered a 141% return, and the Texas Panhandle Granite Wash project offered a 128% return with the same product prices. The high liquids content of the Granite Wash production contributed heavily to the high return rate.

Those product prices were significant, because the 10-year New York Mercantile Exchange strip price projects gas at $7.25/MMBtu and oil at $87/bbl.

In addition, the risk factor in the company's Colony Granite Wash project was only 15%, the same as the Barnett Shale and the lowest in the corporate portfolio. The risk factor at the Texas Panhandle Granite Wash project was 25%, about the same as the Fayetteville Shale.

Low-cost gas and high reserve, long life from the Granite Wash and gas shale plays are particularly important under Chesapeake's view of prices in the future. According to the company's presentation, gas prices are likely to remain relatively low because of the prolific shales, but most of the 85% share of gas production that comes from more conventional fields requires New York Mercantile Exchange prices between $7 and $9/MMBtu to reach the economic range to offset declining non-shale production.

The shales and Granite Wash generate generous returns at those prices, and the low-cost producer holds an economic advantage.

That outlook helps explain the activity in the Granite Wash. Chesapeake discovered the Colony Granite Wash project in February 2007. Under the company's drilling program, production rose 44% from the end of the second quarter of 2009 to 108 MMcfge/d at the end of the third quarter and to 110 MMcfge/d by November 2009.

It planned to raise that production to a net 145 MMcfge/d by the end of 2010 and 175 MMcfge/d by the end of 2011. It anticipated using seven rigs during 2010 to drill approximately 40 net wells.

In the Texas Panhandle Granite Wash project, Chesapeake increased production 3% during the third quarter and 18% in the 12 months ended September 30, 2009. It planned to raise production to 75 MMcfge/d by the end of 2009, to 80 MMcfge/d by the end of the following year and to 85 MMcfge/d by the end of 2011. It anticipated running three rigs during 2010.

Those production increases required planning for infrastructure to process and transport the output from the wells. In April 2008, Chesapeake signed a deal in which Enogex LLC would invest $55 million to build gathering and transportation lines linking a new gas-processing plant near Clinton, Okla., with Chesapeake production and the main pipeline system. That plant opened in 2009 with a capacity of 120 MMcfge/d and room for expansion.

Among recent wells, IHS Inc. reported Chesapeake completed the 2H Zybach 15 in Wheeler County, Okla., for 4.35 MMcf/d of gas, 185 b/d of 49-degree-gravity oil and 1,740 b/d of water. It tested the well with a north lateral through a 30/64-in. choke with production from perforations and a 10-stage frac job from 12,208 and 16,463 ft. in Granite Wash.

The lateral leg passed near a vertical Granite Wash well, the 1 Zybach 15, drilled by Chesapeake in 2005. That 12,375-ft well tested for 284 Mcfg/d of gas, 17 b/d of condensate, and 33 b/d of water from a single fractured interval between 11,723 and 12,270 ft. Between September 2005, and April 2009, the well produced 71 MMcf of gas and 2,900 bbl of condensates. April gas production had dropped to 26 Mcf/d of gas.

On the Oklahoma side of the play, Chesapeake completed the 1-16H State-Walton near Foss in northern Washita County, for 5.44 MMcf/d of gas, 233 b/d of condensate, and 991 b/d of water, according to a September IHS Inc. report. It tested the Breathwaite Field well through a 20/64-in. choke from fractured perforations between 12,950 and 17,245 ft in the horizontal well.

Chevron Corp.
Like many larger companies, including other majors, Chevron Corp. took an active role in the development of the Hugoton Field of Kansas, Oklahoma and Texas and the western Anadarko Basin of Oklahoma and the Texas Panhandle. That development included Granite Wash fields.

While those fields no longer top the list of the company's most active plays, Chevron still holds properties in the area. Among those fields are Canadian Southwest and Mills Ranch.

In 1999, Samson Lone Star LP, an operator that also worked those two fields went to the Texas Railroad Commission to request tighter spacing on the Isaacs 210 No. 8 well and the Isaacs 209 No. 8 and No. 9 wells in Canadian Southwest Field and wildcat wells in Hemphill County.

Samson would be the operator on those wells but its agreement called for 320-acre spacing between wells and a provision of that agreement said all parties in the field had to agree on spacing changes. Chevron opposed the change to tighter spacing, and it was the operator of the existing wells on the Isaac 209 and 210 leases.

Chevron held a 64% interest in the leases and Samson held almost a 6% working interest in the leases.

Surrounding fields, including Hemphill and Mendota Northwest, used 160-acre spacing, and in some cases, 80-acre spacing.

In its argument, Samson said the original recoverable gas in place under the Isaacs 209 lease was 16.8 Bcf of gas and the two existing wells would recovery only 8.2 Bcf. Existing wells on the Isaacs 210 lease would leave 6.98 Bcf of recoverable gas in the ground, Samson added.

The Railroad Commission ruled in favor of Samson.

Chevron still actively works the play, but not in a big way. In September 2009, Amarillo.com said Chevron recompleted the #2 Ruth Ledbetter in December of the previous year and tested its for 38 bbl of oil with a gas-oil ratio of 842.

It also tested the #2214 Isaacs in Canadian Southwest Field for an initial potential of 194 Mcf/d. Both were vertical wells.

Cimarex Energy Co.
Cimarex Energy Co. worked the Granite Wash in Texas as part of its portfolio, but activity in that play weakened with the fall in natural gas prices as the company concentrated on assets with more value.

In its third quarter report, Cimarex reported overall production of 441.5 MMcfge/d, including 306.8 MMcf/d of gas. That production dropped from the same period a year earlier as the company reduced its drilling activities.

It drilled 94 gross, 56 net, wells, in the first nine months of the year and completed 94% as producers and kept 11 rigs operating.

Of the five rigs working the company's Midcontinent properties, three concentrated on the company's Anadarko Basin Woodford Shale Cana play where Cimarex participated in 37 gross, 15.7 net, wells. One rig worked the Texas Panhandle where Cimarex has drilled Granite Wash wells.

A permit taken out in 2003 proposed drilling the 1068 Hobart Ranch well to Granite Wash in Hemphill County, Texas. It projected that vertical well to 10,800 ft but later canceled the permit. The well was the former Shell Oil Co. 1-68 Fred Hobart Ranch-A-EL, a well that showed an initial potential of 6.5 MMcf/d of gas from the Morrow.

In January 2009, IHS Inc. said Cimarex completed a Granite Wash well about 21 miles south of Canadian Texas. The company perforated its 3468 Hobart Ranch well in Hemphill Field in 10 intervals between 10,666 and 12,362 ft. The well tested for an initial potential of 2.37 MMcf/d of gas, 18 b/d of condensate and 1,450 b/d of water through a 30/64-in. choke with 2,281 psi of flowing tubing pressure.

It also completed the 1069 Hobart Ranch for 2.06 MMcf/d of gas and the 2169 Hobart Ranch for 2.16 MMcf/d of gas in the same field.

According to IHS, Section 29 of the field hosted three Shell Oil Granite Wash wells completed between 1964 and 1978 and 14 more completed by Cimarex and its predecessor company, Helmerich & Payne Inc. from 1997 to 2008. In August, the wells produced 94 MMcf/d of gas and 700 b/d of condensate. The section has produced 10.4 Bcf of gas and 165,000 bbl of condensate.

During a second quarter 2009 conference call recorded by Seeking Alpha, Tom Jordan said the company held a “nice position” in the Granite Wash and had been one of the most active drillers in the play for years. He said the company would drill a couple of wells to the formation during the remainder of 2009, but he didn't anticipate the spectacular wells that some other operators have found.

Cordillera Energy Partners III LLC

Cordillera Energy Partners, formed with equity commitments from EnCap Investments LP and other institutional investors, is only 10 years old, but the same core management team is now operating and building its third entity and has a deep reputation as a top performer in many North American hydrocarbon basins.

The company is considering developing a fourth organization under the same team, experienced and technically focused managers who continue to build upon previous experiences at some of the industry’s most notable oil and gas companies. This foundation combined with the company’s significant position in the Granite Wash in the Texas Panhandle provides tremendous value creation opportunities for the company’s investors as well as a dependable supply of domestic energy to the American consumer.

George Solich, a veteran of operations with HS Resources and Apache Corp., heads that team as president and chief executive officer, and leads the acquire-and-exploit operation.

The first organization, Energy Partners I LLC, worked the Anadarko, Delaware, and San Juan basins, and in mid-2003, three-and-a-half years after its inception, grew into a substantial company with 250 Bcfge in proved reserves, 30 MMcfge/d of production, and US $35 million in annual cash flow.

At that point, it sold its assets to Patina Oil & Gas for $247 million in cash and Patina warrants.

The management team and investors then formed Cordillera Energy Partners II with $200 million in private equity and $300 million in credit from six banks headed by JP Morgan Chase.

The strategy remained the same, and so did the success. By the middle of 2008 the company put together 725 Bcfge in proved reserves, almost 50 MMcfge/d in production from 600 wells, and had an annual cash flow of more than $200 million.

Its properties were in the Douglas, Cleveland, Granite Wash, Atoka, and Morrow formations in the Texas Panhandle; the West Central Anadarko Basin and the Cotton Valley Sand and Lime, Hosston, Pettet, and Travis Peak formations in the East Texas Basin.

It sold all of the assets again in September 2008, for $1.02 billion. The East Texas and Texas Panhandle properties went to Forest Oil for $529 million in cash and 7.25 million shares of Forest Oil stock for a total value of some $873 million. In addition to the East Texas properties, that acquisition gave Forest 67,700 gross, 54,000 net, acres in the Granite Wash in Buffalo Wallow Field with 206 Bcfge in estimated proved reserves and production from the Atoka and Morrow formations as well as the Granite Wash.

Forest used the Panhandle properties as part of a base to become one of the more active and successful operators in the Granite Wash.

"The Cordillera II divestitures fit perfectly in our strategy to deliver excellent returns to our shareholders while keeping our exceptional franchise together to continue to build Cordillera III," Solich said at the time.

In March 2007, even before the sale, the team planned to form Cordillera Energy Partners III LLC, again with the help of $500 million in equity from EnCap and its institutional investors and $600 million in credit from the JP Morgan Chase bank group.

The new iteration stayed in the Texas Panhandle, Western Oklahoma, and the East Texas Basin, but it also started looking at the potential of the Marcellus gas shale play in Appalachia.

By the fourth quarter of 2009, the newest Cordillera claimed production of nearly 25 MMcfge/d and more than 2,300 low-risk vertical and horizontal drilling locations in the Granite Wash, Tonkawa, Cleveland, Atoka, and Morrow formations.

By its tenth year of operations, the management team had acquired properties for $700 million and drilled more than 235 vertical and horizontal wells for another $300 million in investments.

In a February 2010, presentation during an Oil and Gas Investor seminar, Cordillera executives said the company was an early developer of the Granite Wash play and extended the large Buffalo Wallow segment of that play 20 miles to the northeast in the Texas Panhandle.

It also held 98,000 gross, 44,000 net, acres of rights in the Granite Wash, making it one of the top five leaseholders in the play.

As it entered 2010, the company had two rigs working the Granite Wash and planned to double that number by mid-year. Those rigs aimed at 20 to 30 vertical and five to ten horizontal wells during the year.

By the end of 2009, Cordillera III already had accumulated 392 Bcfge in proved reserves.

While some operators have gone exclusively to horizontal drilling in the play, Cordillera drills both horizontal and vertical wells with good reasons. Vertical wells are less expensive and help bring proved reserves on line more quickly. They also set up locations for future horizontal wells, the company said. Horizontal wells maximize discounted net present value and generate higher production and cash flow.

During 2009, Cordillera was among the more active operations in the Granite Wash play with wells in the Buffalo Hollow area in Hemphill County and the Red Deer Creek area in Roberts County in the Texas Panhandle.

Devon Energy Co.
Devon Energy Co.'s Granite Wash Formation properties in the Texas Panhandle provide the company with a steady flow of natural gas as the company applied its horizontal drilling and fracturing expertise to the mature play to extract more production.

Devon holds more than 46,000 net acres in the Granite Wash and, in 2008, it participated in 10 successful horizontal wells in the play. For 2010, Devon planned to drill additional horizontal Granite Wash wells.

Horizontal drilling in recent years has focused on the sands located at depths of 11,000 to 16,500 ft, with typical drilling and completion costs on a horizontal well coming in between US $5 million and $11 million and recoveries up to 7 Bcfge per well. Initial production rates can range from 3 to 15 MMcf/d of gas, Devon said.

Those results are attractive under normal circumstances; Devon's acreage is held by existing production, so the company may defer drilling to a time when commodity prices are stronger.

When other companies cut back on operations, Forest Oil Corp. raised land holdings in its section of the Granite Wash play in the Texas Panhandle.

It's easy to see the company's enthusiasm for the Granite Wash in general and horizontal wells in particular. in its Greater Buffalo Wallow area of Texas. According to the company's third quarter 2009 report, its second horizontal well in the play showed an initial production rate of 30 MMcfge/d. That number came from a 24-hour rate of 10.4 MMcf/d of gas, 1,300 b/d of oil, and 2,000 b/d of natural gas liquids. Forest had a 94% interest in the well completed in October 2009.

The company's first horizontal well, the 507H Zybach, completed in April 2009, initially produced 17 MMcfge/d and, at the end of the second quarter, averaged 7.8 MMcfge/d since its initial production. That well was 14 miles northeast of Wheeler in northeastern Wheeler County, Texas, and produced from a south lateral drilled to 16,500 ft. Forest had an 88% interest in that well.

According to IHS Inc., that well lies 500 ft southeast of a 14,300-ft vertical Granite Wash well drilled by the company in September 2008. That well, the 307 Zybach, tested for 2.18 MMcf/d of gas, 35 b/d of condensate and 71 b/d of water from 10 intervals between 11,951 and 14,148 ft.

The company held more than 120,000 gross, 93,000 net, acres of land in the play at the end of the third quarter and added 2,000 of those acres during the third quarter. Forest had three operated and three non-operated rigs working the play, all capable of drilling horizontal wells.

It planned to drill two more horizontal wells during the fourth quarter of 2009 and anticipated raising its corporate-wide rig count.

By the end of the second quarter, the company also participated in another eight non-operated horizontal wells with an average initial production rate of 8 MMcfge/d.

Forest has considerable experience in the play and has accumulated a database of more than 400 vertical tests in the area. It also will investigate Atoka and Morrow targets.

One of those wells, the 4025 Reynolds, completed by Forest about 12 miles northeast of Wheer, tested for 4.09 MMcf/d of gas, 50 b/d of condensate, and 1,455 b/d of water from five fractured zones between 11,880 and 14,808 ft.

During a February 2009, guidance report, Forest said it would concentrate its 2009 activities on the East Texas-North Louisiana corridor, including the Haynesville and Bossier plays, and the Buffalo Wallow area.

Great Plains Operating LLC
Great Plains Operating LLC started business in September 2007, to look for Anadarko Basin reserves, primarily in the Texas Panhandle and western Oklahoma.

The management team, composed largely of former Grayhawk Energy Inc. operations managers, has worked together as a team since 2002 and completed more than 50 successful Barnett Shale wells in the Fort Worth Basin, the Red River Sand in the Williston Basin, and the Granite Wash in the Texas Panhandle.

James A. Smith was the operations manager for Grayhawk, R. Brandon Hussing was exploration manager for that company, and Todd G. Laney was an equity partner and land manager.

Grayhawk gained notoriety as the first company to drill a horizontal Granite Wash well in Lard Ranch Field in in Roberts County, Texas. At that time, gas production was declining in the field, and the company sought to invigorate recoveries with horizontal wells.

In an application to the Texas Railroad Commission, it said vertical wells, capable of ultimate recoveries between 1 Bcfg and 1.5 Bcfg were marginal at best and estimated horizontal well recoveries at rates between 2 Bcf and 5 Bcf.

Lard Ranch Field was discovered in 1980 and had 20 gas wells and one oil well at the time of the application. Grayhawk had drilled one vertical well and 12 horizontal wells in the area since 2004.

Grayhawk proposed to sell the company in January of 2007.

Laredo Petroleum Inc.
Laredo Petroleum Inc., formed in 2007 by a group of oil country veterans headed by Randy Foutch, chairman and chief executive officer, counts the Granite Wash in the Texas Panhandle among its prime targets.

It discovered the Begert (10,200) Field in 2008 and has concentrated efforts on production from Granite Wash and Atoka zones. In the process, it persuaded the Texas Railroad Commission to lower spacing in the field to allow it to drill more wells.

According to IHS Inc., Laredo drilled the 4 Elm Creek Ranch 35 well for 4.42 MMcf/d of gas, 44 b/d of condensate, and 727 b/d of water from both both the Granite Wash and Atoka formations. The field is about 20 miles southeast of Canadian, Texas, in Hemphill County.

About two miles northeast in the same field, the company tested the 4 Elm Creek Ranch 45 for 1.63 MMcf/d of gas, 26 b/d of condensate, and 698 b/d of water, also from both formation.

The Amarillo.com web site for the week of Oct. 15, 2009, said Laredo had completed the #3 Begert Trust for a potential 1.44 MMcf/d of gas, the #4 Begert Trust for an initial potential of 1.2 MMcf/d of gas, and the #4 J.R. Flowers for an initial potential of 1.1 MMcfg/d.

The Begert Trust 3 No. 1 discovery well for Begert (10,200) Field produced from both zones. At the time there were no active wells from the Cleveland, Granite Wash, or Atoka zones within 2.5 miles.

Later, the company received permission to drill on 160-acre spacing in the field, down from an initial 640-spacing plan.

By that time, the field was capable of delivery nearly 1.7 MMcf/d of gas and had produced a cumulative 2.8 Bcf of gas.

In requesting the tighter spacing, the company present records from 22 field wells and showed that only three wells drained more than 160 acres. The average well drained only 106.5 acres with an estimated ultimate recovery of 1.18 Bcf of gas per well. Estimated ultimate recoveries for the 22 wells ranged from 300 MMcf to 2.3 Bcf of gas.

Linn Energy LLC
Linn Energy LLC picked out some prime Granite Wash property in Wheeler, Roberts, and Hemphill counties in Texas on acreage flanked by some of the bigger operators in the play.

According to a November 2009, presentation, the company held 70,000 gross, 38,000 net acres in the play, 89% held by production. Those properties are in Lard Ranch Field and southeastern Roberts County; Mendota Ranch, Seventh Step, Twin Channel, Buffalo Wallow, Two Step fields and the Dyco area of Hemphill County; and the Greater Stiles Ranch area of Wheeler County in Texas.

In the Stiles Ranch area, Linn held 27,000 gross, 13,500 net, acres with one planned non-operated horizontal well, the Tom Puryear 5028H and a planned vertical well location, the Miller Spinney 39-11. In the surrounding area of northeastern Wheeler County, Newfield Exploration, Devon Energy, Forest Oil, Samson Resources, and Chesapeake Energy have wells with initial potential production rates as high as 25 MMcfge/d.

Overall, Linn put 757 engineered locations with 570 Bcfge of potential resource in its high-confidence inventory and listed 172 locations and 145 Bcfge in proved undeveloped reserves.

Linn is a conservative company. In its third quarter report, the company said it concentrated on workovers, recompletions, and optimization projects and deferred its Granite Wash completions. It anticipated adding 10 MMcfge/d from those deferred completions by the end of the year.

IHS Inc. in June 2009, said Linn completed its 10 Miller Spinney 38 well in northeastern Wheeler County for 2.42 MMcf/d of gas with 45 b/d of condensate and 190 b/d of water. It tested the vertical well from fractured Granite Wash zones from 12,628 to 14,098 ft and from fractured and acidized Atoka from 14,802 to 16,116 ft.

Linn completed four additional vertical wells in the same section in Stiles Ranch Field between August 2007 and November, 2008. The three wells on line produced 716 MMcf of gas and 11,000 bbl of condensate from commingled Granite Wash and Atoka, according to the IHS report.

Mewbourne Oil Co.
Mewbourne Oil Co. counted 44 years of experience in the Permian and Anadarko basins in late 2009, and it built on that experience to build a position in the Granite Wash play.

According to the company Web site, “Historically, the company has emphasized establishing long-life natural gas reserves through the drilling of medium-depth wells between 3,000 and 13,000 ft deep. Prospective drill sites generally include field extensions, step-outs, trend plays, and other anomalies that are believed to be contiguous to areas where the presence of oil and natural gas has already been established. The company currently operates over 1,000 wells and produces approximately 65 Bcfge per year.”

That profile fits the Granite Wash play. The company's holdings include Granite Wash acreage in Canadian Southwest and Hemphill fields in Hemphill County and St. Clair and Northwest Mendota fields in Roberts County, Texas.

A February 2009, report from IHS Inc. said the company completed the 865H McMordie 86 development well in St. Clair Field about 10 miles north of Miami from a north-headed horizontal leg for 4.3 MMcf/d of gas, 38 b/d of condensate, and 39 b/d of water.

The well produced from fractured intervals between 9,654 and 11,360 ft through a 25/64-in. choke.

Newfield Exploration Co.
Newfield Exploration Co. may not hold the highest land position in the Granite Wash play in the Texas Panhandle, but the company has produced top-ranked results from its Stiles Ranch holdings.

Overall, Newfield claims some 50,000 acres of land prospective for Granite Wash with 360 Bcfge in reserves, or about 12% of the company total, according to a September 2009, presentation. The Woodford Shale in the Arkoma Basin and Monument Butte Field in Utah account for 48%.

Newfield likes the Granite Wash for its high potential and strong returns.

In a May 2009 presentation, the company said it entered the play in 2002 through its acquisition of EEX Corp. and drilled 147 vertical wells since that time. Its first horizontal well production started in December 2008, and it has about 100 horizontal well locations, all on acreage held by production, which means the company can control the rate of development.

In January, the company produced 145 MMcfge/d from Granite Wash.

Newfield is most active at its Stiles Ranch Field where it has approximately 20,000 net acres. Its drilling program there has given up gas from more than 30 horizons from 12,000 to 15,000 ft. Earlier in 2009, it planned a three-rig drilling program in the field through 2009 with a goal of drilling about 14 horizontal wells.

By the time Newfield's third quarter 2009 report came out in November, it added a fourth rig to the Granite Wash play, based on the success of the horizontal drilling program.

Its first seven wells in the field showed an average gross initial production rate of 22 MMcfge/d, but Newfield deferred completion on the wells until it got production results on another six to eight wells in early 2010. The company has an 80% interest in the Stiles Ranch wells.

IHS Inc. reported results of Newfield's horizontal drilling program at Stiles Ranch, about 12 miles northeast of Wheeler, Texas.

The 7H McCoy 27 started production in December 2008, flowing 25 MMcf/d of gas and 1,900 b/d of condensate from a 3,400-ft lateral in Granite Wash.

A mile to the northwest, the 8H McCoy 27 tested in March 2009, for 21 MMcf/d of gas and 1,230 b/d of condensate from a 3,600-ft Granite Wash lateral.

A half-mile east of the first horizontal well, the company tested the 27-10H McCoy from 12 MMcf/d of gas and 280 b/d of condensate from a 2,900-ft lateral.

A south offset to that well, the 5H Thomas 5, tested for 20 MMcf/d of gas and no reported condensate from a 3,900-ft lateral.

Two miles to the north of that well, the 7H Williams 33 produced 21 MMcf/d of gas and 570 b/d of condensate from a 3,600-ft lateral. That's the northernmost well in the company's group to date.

Three miles southeast of the Williams well, the 3H Britt D4 flowed 21 MMcf/d of gas from a 3,900-ft lateral.

Another three miles southeast, the 13H Britt Ranch 14 tested for 8 MMcf/d of gas and 180 b/d of condensate from a 2,900 ft lateral.

Penn Virginia Corp.
Like many companies after the price crash of 2008, Penn Virginia Corp. chose to focus on the plays that continued to make profits. The Granite Wash play topped that list of attractive plays with the Lower Bossier (Haynesville) Shale and Mississippi Selma Chalk not far behind.

Other developments await better gas prices, according to an October 2009 company presentation.

Penn Virginia held some 10,000 net acres of Granite Wash properties in Washita County, Okla., with more than 90 horizontal locations on 160-acre spacing. It raised that land position to 17,000 acres in November.

Those properties contained 76 Bcfge in proved reserves, another 67 Bcfge in probable reserves, and 66 Bcfge in possible reserves.

It had drilled 23 horizontal wells through the second quarter of 2009 for 23 MMcfge/d in net production.

In its planning, the company estimates an average estimated ultimate recovery of 5.9 Bcfge, with an initial potential 12.3 MMcfge/d, a 30-day average of 8.9 MMcfge/d, a well cost of US $6.3 million, and finding and development costs of $1.43/Mcfge.

Assuming a gas price of $6/MMBtu and an oil price of $70/bbl, the company can earn a before-tax internal rate of return of more than 100% and an after-tax return of 68%.

Those numbers differ slightly from actual experience. Estimated ultimate recoveries on its first 23 wells averaged 6.2 Bcfge with an initial potential of 8.2 MMcfge/d and a 30-day production rate of 8.2 MMcfge/d.

Its six latest wells at that time offered estimated ultimate recoveries averaging 7.5 Bcfge, initial potentials of 14.6 MMcfge/d, and initial 30-day rates of 10.6 MMcfge/d. At the same time, well costs dropped from $7.3 million to $6.3 million.

Production from its wells comes in at 1,200 Btu/Mcf of gas, and 40% of the production is oil.

The Granite Wash play gave Penn Virginia most of its Midcontinent-area production.

The company's third quarter 2009 report said it completed two gross, 0.8 net, Granite Wash wells, one successful and one awaiting completion.

Penn Virginia has gotten more optimistic. It raised its capital expenditure plans to a range between $216 million and $228.7 million, up more than 20% from its initial projection as it continued Granite Wash activities, resumed operations in the Haynesville, and expanded leasing in the Haynesville, Marcellus Shale, and Granite Wash.

By that time, Granite Wash production had climbed to 24.6 MMcfge/d, up sharply from 2.8 MMcfge/d in the same quarter in 2008.

“Due to the strong results from the Granite Wash play and compelling economics, in late October we deployed an operated rig to this play. In addition, as previously announced, we continue to add to our acreage position in the Granite Wash play and have expanded our position in two additional Granite Wash prospects to increase our acreage position from approximately 10,000 net acres at year-end 2008 to approximately 17,000 net acres currently, with a goal of reaching 20,000 net acres by year-end 2009,” Penn Virginia said in the report.

Among its wells, the company completed the 2-4H Boatsman about four miles southeast of Clinton in northern Washita County, according to IHS Inc. The well flowed an initial 6.33 MMcfg/d of gas, 733 b/d of condensate, and 1,350 b/d of oil through a 32/64-in. choke from four fracture Granite Wash zones between 12,140 and 16,178 ft with 2,160 psi of flowing tubing pressure. True vertical depth was 11,827 ft.

Plains Exploration & Production Co.
Plains Exploration & Production Co. has a lot of potential in the Granite Wash play in the Texas Panhandle, but its venture with Chesapeake Energy in the Haynesville Shale and its offshore properties were higher on the priority list in late 2009.

In an October 2009, presentation, the company said it planned to develop its existing properties with exposure to the Granite Wash, but it also will accelerate its Haynesville development.

Plains held 444,000 gross acres in the Panhandle and had 715 sq miles of 3-D seismic in the area. That area has more company acreage than any other. Its 113,000 acres in the Haynesville is its second-largest holding. October production from the Panhandle was about a net 30 MMcfge/d from all properties.

The company held 5,650 net acres in the Wheeler area near Stiles Ranch and Britt Ranch Field areas in Wheeler County, Texas. Chesapeake, Newfield, and Forest Oil all have drilled good Granite Wash wells in the area. The company said it had at least 29 horizontal well location on its Wheeler acreage.

It also held 12,300 net acres in the Marvin Lake area in Hemphill County along the Texas-Oklahoma border. To date, no Granite Wash wells have been drilled in that area, but it lies northeast of the prolific Buffalo Wallow Granite Wash Field.

Plains expected to spud its first horizontal Granite Wash well in the first quarter of 2010.

Some of those Panhandle properties came from the company's acquisition of Pogo Producing in 2008. Pogo drilled the Anderson Ranch 61 No. 1 on the Marvin Lake properties and encountered three Granite Wash pay zones. The area also had potential production from Morrow, Springer, and Hunton formations.

Pogo had also drilled wells in the Wheeler area.

Questar Corp.
Questar Corp. put most of its 2009 effort into its Pinedale Anticline tight sand play in southwestern Wyoming and Haynesville Shale properties in Louisiana, but it is ramping up to include the Granite Wash in its more active plays.

According to a November 2009, presentation, the company was drilling its first horizontal Granite Wash well in Wheeler County. The well is about four miles south of a Newfield Exploration well that tested for 25 MMcf/d of gas and 1,900 b/d of condensate.

The company has working interests in other nearby wells in the county that have tested for 20 MMcf/d of gas, for 14 MMcf/d of gas, and 1,375 b/d of condensate and for 12 MMcf/d of gas and 280 b/d of condensate.

It planned to assign two Questar-operated rigs to the play in 2010.

Questar estimated horizontal well costs on its properties between US $4.8 million and $8 million each to reach estimated ultimate recoveries of 3.5 to 6 Bcfge per well.

The company currently holds 49,401 gross, 21,634 net, acres of prospective Granite Wash properties.

In a September 2009, presentation, Charles B. Stanley, executive vice president and chief operating officer, said the company had drilled 69 new vertical wells in 2008 and had July 2009 production from the Granite Wash of about 38 MMcfge/d. At that time, with less acreage, it had 266 remaining vertical well locations.

During a second quarter report, the company said it had been allocating significant capital to a multi-rig vertical program in combined Granite Wash-Atoka play in the Texas Panhandle, but success with horizontal wells by other operators persuaded the company to evaluate horizontal drilling opportunities.

Range Resources Corp.
Range Resources stays busy enough with its “Big Three” plays that the Granite Wash occupies little space in the company's corporate presentations, but the company takes an active interest in many of the country's high-potential plays, and the Granite Wash is no exception.

The Marcellus Shale, Barnett Shale, and its Nora/Haysi Field coalbed methane-Devonian shale plays sit at the top of the company's preferred-play list.

It's easy to see why. It has largely derisked 11 Tcfge of Marcellus prospects in southwestern Pennsylvania, according to a fourth quarter 2009 presentation. The company discovered the Marcellus play and drilled the first commercial well there in 2004.

It also included Granite Wash properties in western Oklahoma and Morrow properties in the Texas Panhandle, with Granite Wash potential, in its extensive inventory.

In a February 2008, report, the company said it had a three-rig drilling program in the Granite Wash in the two states, but even then the Barnett was the top priority in the company's Permian division. It drilled 20 gross, 16.6 net, wells in the last quarter of 2007, and all but two were in the Barnett Shale.

In January 2009, IHS Inc. said the company took out a permit to drill the 158 Dream well about 15 miles southwest of Canadian in Hemphill County in the Texas Panhandle. The company scheduled the well to Mississippian at 12,500 ft, but Brown Dolomite, Granite Wash, and Morrow were secondary targets. That well was a mile west of Granite Wash wells in Hemphill and Lora fields.

A May 2009 IHS Inc. release said the company scheduled one of its deep exploratory tests in the Anadarko Basin about 11 miles northwest of Miami, Texas, in Roberts County. That well, the 1075 Russell, was projected to 11,290 ft to investigate Wolfcamp, Granite Wash, Atoka, Morrow, and St. Louis zones.

The company also discovered a St. Louis Formation field about two miles to the northeast.

Samson Resources
Samson Resources, an arm of Samson Investment Co., an active privately held petroleum development company, operates more than 4,000 wells and holds interests in more than 11,000 wells.

With a significant investment in unconventional oil and gas plays, it specializes in technical approaches to development and controlling costs, a combination well suited to successful development in the Granite Wash. Among unconventional plays, it also holds properties in the Bakken oil play and the Haynesville, deep Bossier, Woodford, and Marcellus plays.

While Samson doesn't disclose details on its Granite Wash operations, its attention to detail revealed itself in a 1999 case before the Texas Railroad Commission. At that time Chevron was the operator of Canadian Southwest and Mills Ranch Granite Wash fields in the Texas Panhandle with a 64% interest.

Subsidiary Samson Lone Star LP held a 6% interest in the fields and studied optimum well spacing for maximum production.

Current rules called for 320-acre spacing, but Samson went to the Railroad Commission to ask for permission to drill on 160-acre spacing. Nearby Hemphill and Mendota Northwest fields already were on the tighter spacing with some special-situation wells on 80-acre spacing.

Samson asked for tighter spacing in the Isaacs 210 No. 8 area and the Isaacs 209 No. 8 and No. 9 areas in Canadian Southwest Field.

At the time, Samson had signed an agreement with Chevron that said all working interests owners had to agree on matters of spacing.

In its argument, Samson said the original recoverable gas in place under the Isaacs 209 lease was 16.8 Bcf of gas and the two existing wells would recovery only 8.2 Bcf. Existing wells on the Isaacs 210 lease would leave 6.98 Bcf of recoverable gas in the ground, Samson added.

The Railroad Commission ruled in favor of Samson.

Samson remains active in the Panhandle. IHS Inc. reported in December 2008, the company's 313H Zybach horizontal well in northeastern Wheeler County tested for 10 MMcfg/d of gas with 322 b/d of condensate and 197 b/d of water.

The well produced from fractured perforations in a north lateral between 12,152 and 14,472 ft. It tested the well on a 37/64-in. choke with 2,910 psi of flowing tubing pressure.

That well was a third of a mile north and slightly west of a Granite Wash well also drilled by Samson the previous April. That well tested for 587 MMcf/d of gas and 169 b/d of condensate and yielded 494 MMcf of gas and 13,100 bbl of condensate in four months onstream as part of West Park Field.

Sanguine Gas Exploration LLC
Sanguine Gas Exploration LLC has an extensive Granite Wash program in the works with operations in both the Texas Panhandle and Oklahoma side of the Anadarko Basin Play.

On the Oklahoma side, the company asked for increased density for Granite Wash wells in Beckham County in 2008. The company argued that existing density would leave approximately 54.8 Bcf of gas in the ground that wouldn't be recovered by existing wells.

The Oklahoma Corporation Commission granted the request for 160-acre spacing.

On the Texas Panhandle side of the play, an IHS Inc. report said Sanguine extended production with a workover about 15 miles southeast of Wheeler in Wheeler County. That workover resulted in initial production of 413 b/d of 44-degree-gravity oil, 874 Mcf/d of gas and 52 b/d of water from fractured Granite Wash perforations between 12,258 and 12,440 ft. Tests in two deeper Granite Wash zones failed to recover commercial hydrocarbons.

Sanguine previously had completed the 1019 Mills discovery well in the same section of Mills Ranch Field. That re-entry of a well previously completed in Morrow tested in Granite Wash for 267 b/d of oil and 478 Mcf/d of gas.

A June 2009 IHS report said Sanguine tested 3024 Mills Ranch well in the same field for 245 b/d of oil and 850 Mcf/d of gas.

An April 2009 IHS report said Sanguine re-entered the 1018 Mills in Mills Ranch Southeast Field to recover 615 b/d of oil and 1.85 MMcf/d of gas in initial testing from Granite Wash.

In October 2009, Amarillo.com said the company planned to drill the No. 1015 Ranch to 15,000 ft and the No. 1051 Bryant to 11,800 ft. Both wells were in Mills Ranch Field.

Texakoma Operating LLC
Privately held Texakoma Operating LLC holds properties in eight of Texas' 10 operating districts including the Granite Wash play in the Texas Panhandle section of the Anadarko Basin.

According to a July 2009 IHS Inc. report, the Plano, Texas, company’s 1 N. McMordie 124 well tested for 210 b/d of oil and 1.43 MMcf/d of gas on a development well about 13 miles north of Miami, Texas, in Roberts County.

The well produced from four fractured and acidized zones in Granite Wash between 9,568 and 9,742 ft on a 32/64-in. choke with 463 psi of flowing tubing pressure.

The nearest well is a 1981 Granite Wash producer less than a half-mile to the south-southeast drilled in 1981 by Energy Reserve Group Inc. That well, the 1-124 McMordie, drilled to 10,000 ft, tested for 80 b/d of oil. A part of Mendota Northwest Field, the well produced 6,300 bbl of oil and 58 MMcf of gas on a year and a half on line.

The only other well in Section 124 was a Ricks Exploration test drilled in 2001 one-half mile to the northwest in St. Clair Field. That well flowed 295 Mcf of gas and 11 b/d of condensate.

Unit Petroleum Co.
The Unit Petroleum Co. subsidiary of Unit Corp. drills low-risk field extension and development wells on internally generated prospects. That strategy allowed the company to replace at least 150% of produced reserves annually over the past 25 years, and it fits nicely with Granite Wash development.

The company's second quarter report said it drilled 16 wells during 2009 and all were successful. An October 2009, presentation said the company drilled 14 vertical and two horizontal wells in the Granite Wash during 2009 and all were successful.

The company has properties with Granite Wash potential in both Oklahoma and the Texas Panhandle but has drilled recently only on the Texas side of the play. In 2008, it drilled 42 wells in the play with a 98% success rate at a cost of US $78.3 million. One well was horizontally drilled.

Its average working interest in the wells was 67%, and it has accumulated 35.9 Bcfge in Granite Wash reserves at a finding cost of $2.10/Mcfge.

Unit held 95,000 gross, 38,000 net acres, in the play at the end of 2008.

Unit is no newcomer to the Granite Wash. IHS Inc. reported the company planned to drill the 3 J.C. Vollmert to the Granite Wash at 10,700 ft in 2005 about 16 miles northeast of Miami, Texas, in Roberts County. That re-entry formerly was an Amoco Production Co. well that tested for 24 b/d of condensate and at an absolute open flow rate of 2.85 MMcf/d of gas.

In April 2009, IHS said the company completed a could of successful Granite Wash wells about nine miles west of Canadian, Texas, Mendota Northwest Field in Roberts County.

There, the 11 J.C. Vollmert tested for 106 b/d of oil, 1 MMcf/d of gas, and 20 b/d of water with 1,280 psi of flowing tubing pressure from perforations between 9,536 and 10,537 ft. It used its own Rig 4 to drill the well to a total depth of 10,900 ft.

The same rig drilled the 11,300-ft 4 Isaacs “B” about 2.5 miles to the north-northeast. That well came onstream flowing 1.18 MMcf/d of gas, 90 b/d of condensate, and 35 b/d of water from fractured perforations between 9,962 and 10,527 ft in Granite Wash.

WG Operating Inc.
Granite Wash pay comes from more than the Des Moinesian zone in the northern Texas Panhandle and western Oklahoma.

The WG Operating Inc. subsidiary of RWG Energy Inc. completed a development well in the area of Hutch Field in southeastern Hutchinson County, Texas, about 10 miles east of Borger in the Wolfcamp Granite Wash.

The company's 6 Harlan tested on pump for 75 b/d of oil and 35 Mcf/d of gas with no water through Wolfcamp two sets of Wolfcamp perforations between 6,354 and 6,408 ft.

The well, reported by IHS Inc. in June 2009, lay on the southern flank of Hutch Field. That field, about four miles long and as much as one-half mile wide, first produced for Philips Petroleum Co. in 1956 and has produced a cumulative 2.54 million bbl of oil and 5.5 Bcf of gas from 30 Permian zone wells.

The field produced 4,700 bbl of oil and 5 MMcf of gas in February 2009.

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