How The Anadarko Stacks Up

The future of stacked horizons in oil and gas got a little brighter in October when Newfield Exploration Co. announced the “Stack” play in Kingfisher County, Oklahoma, an extension to the north and east of its legacy position in the Cana Woodford in Kingfisher and Canadian counties, the latter of which provides the “Cana” in the Cana Woodford name.

The Stack now joins the “Scoop” (South Central Oklahoma Oil Province) in an iconic lexicon of newly branded Anadarko Basin plays, demonstrating that Oklahomans certainly know how to market geology.

The name Stack originates from the “stacked” formation potential that describes opportunity in the multi-layered Anadarko Basin, according to Newfield. A main Stack target is the upper Meramec formation in the lower Mississippian Lime, which strati-graphically is separated from the underlying Woodford shale by the intervening Osage. The vertical column resides from 8,000 to 11,000 feet below the surface across the play and includes in ascending order the Hunton, Woodford, a thin Osage section, and the lower and upper Meramec. Specific hydrocarbon targets are found in 700 feet of oil-saturated limestone with the Meramec accounting for up to 475 feet of that column.

Carbonates are traditionally a hard rock to crack in oil and gas exploitation since conduit channels are naturally cemented. The Meramec is no exception, with Newfield estimating porosity at 3% to 6%. Natural fractures, or faults, serve as storage space for oil migrating into the formation from source rock like the underlying Woodford shale.

Elsewhere, operators have found success in carbonate plays like the legacy Austin Chalk and, more recently, the Buda or Marmaton, by drilling horizontally to intersect as many fractures as possible. And that is what Newfield is doing. The company has adapted a horizontal approach it pioneered in the Arkoma Woodford dry-gas play known as SXL drilling, or super-extended laterals, to its Stack objectives.

The company is also targeting the underlying Woodford via the SXL technique with lateral lengths up to a Bakken-like 10,000 feet.

The Meramec is part of the lower Mississippian Lime, which developed in a subtropical shallow shelf environment roughly 350 million years ago. An ensuing collision of the South American plate forced down-warping during later Mississippian times, generating a deeper basin into which sediments flowed, creating the Barnett and Fayetteville shales in the overlying upper Mississippian.

Consequently, the Stack reflects a shelf slope profile with the Meramec carbonate pinching out to the south. In modern Oklahoma the southward trend transitions into liquids-rich Scoop Woodford targets in Grady, McClain and Stephens counties. Like the Eagle Ford and Utica, the Oklahoma Scoop (and Cana Woodford) is a rainbow spectrum of hydrocarbons grading from dry to wet gas to black oil.

Back in the Stack, Newfield assembled a block that includes 150,000 net acres. The company has drilled seven wells and claims estimated ultimate recoveries (EURs) of 800,000 to 1 million barrels of oil equivalent in a hydrocarbon stream that is 70% liquids (40% oil). The seven original Stack wells featured initial production rates averaging 900 barrels of oil equivalent per day and 30-day IPs of 640 barrels equivalent per day.

Of interest, the two best-performing Stack wells targeted the Meramec.

Well costs range from $9- to $13 million, depending on lateral length and formation depth. The play currently exhibits a 35% rate of return at $90 oil and $3.50 gas, according to the November 2013 Newfield investor presentation.

Newfield's Mississippian Lime sortee opens a new dimension on a geologic formation that has so far resisted broad-based exploitation. The lower Mississippian Lime has witnessed entradas from SM Energy Co. and Callon Petroleum Co. in the Permian Basin and is one of the delineation targets percolating in eastern Colorado. Those Mississippian Lime efforts are early, small and inconclusive.

More generally, the Stack echoes the promise of stacked-formation targets as the next big thing in oil and gas. New stacked plays are showing up with persistent regularity. The Huron and other stacked Devonian targets in Appalachia await higher natural gas prices. And, there are the Jo Mill Spraberry and Clear Fork, to name just two new stacked targets in the multi-layered Permian Basin. None of these individually will unseat the Bakken or Eagle Ford from the kingpin position. But collectively, they will add incremental volumes to the steadily rising tide of U.S. oil production.