There are some new 3-Ds in town: delineation, density and development.

These Ds best describe the motivation throughout the industry as E&P companies seek to unlock value in every play, from the far reaches of the arid Delaware Basin in Texas and New Mexico to the horizontal plays found in the Scoop-Stack counties of Oklahoma.

While preparing this month’s cover story on Oklahoma, I was struck by how many operators said the same thing: They are focused on delineating how far each play such as the Meramec or Osage extends from its current core; and the optimum well density to produce them.

The crux of the matter in these well spacing pilots is this: How many wells can you put in a drilling unit, and on a pad, and what is the production relationship between the parent well and its nearby children? Is there a generation gap that needs to be solved, or can everyone get together at the table, turn off their cell phones, pass the salt and get along?

More results will be reported throughout the rest of this year, which in turn should lead companies to the third D, full-field development, which is the end goal after all. By most accounts, this should begin in earnest in 2018, and we’re going to see a lot more oil coming out of Oklahoma.

“The Stack ranks among the most economically attractive basins in the U.S., with a higher-than-average expected rate of change outlook, as operators are in the early innings of optimizing completions, testing tighter well densities and transitioning to full-field pad development,” said analyst John Freeman of Raymond James in his August report.

Alta Mesa Holdings LP is but one example of an operator testing the boundaries of the 3-Ds. By year-end, it will be public via a merger with Silver Run Acquisition II. In a visit with Alta Mesa CEO Hal Chappelle, the analysts at Seaport Global Securities LLC noted the multiple pays in the northeast counties of the Stack where Alta Mesa works. It primarily pursues the Mississippian Osage on 100,000 highly contiguous net acres, mostly in northeastern Kingfisher County. Breakeven is achieved at $25 per barrel. It was operating six rigs during the first quarter.

“Net/net, management currently pegs inventory at 14 wells per section between these formations (about eight Osage, about four Meramec and two Oswego wells), with potential to increase to about 27 wells per section via downspacing tests (15 Osage, eight Meramec, four Oswego), and up to 55 wells per section if tests in additional zones prove successful [such as the Woodford, Hunton, Manning, etc.],” said the analysts at Seaport Global Securities.

Newfield Exploration Co. (NYSE: NFX), a Woodford Shale pioneer over in the Arkoma Basin, has made delineating Meramec potential on its Stack acreage a priority this year, chairman, president and CEO Lee Boothby said during the company’s second-quarter conference call. Several density pilots are crucial signposts.

Its nine infill wells on its Stark pilot in the Meramec are trending above the 1.1 million barrels of oil equivalent (MMboe) type curve; as are wells on the Tina pilot. It also has the 10-well Freeman pilot underway. Finally, Newfield will test the Upper, Middle and Lower Meramec in 12 wells in its Velta June pilot in Kingfisher County later this year, with first production in the fourth quarter. The project is backstopped by microseismic data, fiber optics, formation DNA rock sequencing and other methods to assess the subsurface treasure.

“Let me emphasize, it’s early. We are presently on our fourth operated pilot, but we think we have 250 DSUs [drilling spacing units] in the Stack alone,” Boothby said. “We’ve purposely tested tighter spacing, knowing the importance of capturing information early on. Density spacing will be fine-tuned to the macro oil environment to maximize value.” He said the company is basing its plans on $50 oil and will not yet raise its type curve until it captures more data, even though many wells are outperforming that curve.

For all these companies, the calculation of what lies ahead could be staggering. Think of the ramifications if an operator can put eight wells on a drilling unit, at a type curve of 1.1 MMboe per well, times 250 units—and if the Meramec can be developed in at least two benches, along with an Osage or Woodford kicker, so much the better. What’s more, many operators are already reporting wells that come in above the type curve thanks to ever-more intense proppant loading. No wonder the burgeoning plays in the Stack are giving investors the urge to splurge.

The E&P industry is about to turn the corner, going from the blustery shale gale to enter a new golden age of full-field development amid steadier breezes. This will be an environment where technical efficiency and enhanced analytics, coupled with the desire to create returns as much as production growth, lead to a more balanced, dare we say, sane, scenario.

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