Private E&P Endeavor Grows Production In Permian’s Midland Basin

FORT WORTH, Texas—The biggest challenge as an operator in the Permian’s Midland Basin that Endeavor Energy Resources faced not that long ago was improving horizontal well performance, according to Lance Robertson, the company’s COO and senior vice president of development.

“Our well productivity was just not competitive,” Robertson said during Hart Energy’s recent DUG Permian Basin conference and exhibition in Fort Worth, Texas.

But times have changed.

The company, which says it is the second largest land position holder in the Midland Basin, made creating better wells its first and second priorities—following maintaining HSE requirements—over the last five quarters. As a result, the average 30-day IP for a group of seven horizontal wells improved 43% in first-quarter 2018 for Endeavor, compared to two years earlier, with oil cut of about 88%.

Playing key roles were optimized landing points along with the use of zipper fracks and stick pipe drill out, which also lowered costs. The company has delineated the Spraberry, Wolfcamp A and Wolfcamp B as it gears up to test Wolfcamp C this year and possible other horizons.

It is not too often that a private E&P shares details about their operations—challenges and accomplishments alike—but Endeavor did just that during DUG Permian in late May. Having been around for more than 40 years in the Midland Basin, the company has amassed about 329,000 net acres in the core—mostly contiguous in Texas’ Midland and Martin counties—and has identified about 9,900 gross 3P horizontal locations.

“We have a substantial inventory of future drilling opportunities—high value low risk,” Robertson said.

Endeavor’s production grew 28% year-on-year, reaching 46,300 barrels of oil equivalent per day (boe/d) net during the first quarter, while the company’s daily oil volumes rose by 35% during the same time frame. Its horizontal well cash margin per boe was $47.09 with 15 horizontal wells placed on production. Currently, four frack crews and 10 rigs are active.

Improving well performance remains a priority for Endeavor, which is focusing on landing points by targeting smaller windows for better stimulation and completion density with narrower stage widths and more clusters per stage among other areas to grow production.

Robertson explained that about a year ago the company’s target window was normally about 40 ft. However, after gaining a better understanding of multiple reservoirs with petrophysical and geomechanical models, Endeavor is now transitioning to a 10-ft to 15-ft target and has already drilled a few 2-mile laterals staying within 9 ft to 10 ft of a single stratigraphic interval.

“Not surprisingly those wells drilled among the fastest we’ve ever drilled because often the rock that often stimulates the best drills very quickly,” Robertson said. “We’re happy with the results, [but] we recognize we still have more to do there. We’re just not finished yet.”

Like others in the Permian, Endeavor also continues to fine-tune its completions technique, adjusting water amounts, proppant loads and spacing as well use of nanosurfactants. But Robertson said the company has leveraged the most from completion density, specifically moving from five to seven to more clusters. “We’re already testing beyond that,” he said.

The work appears to be paying off. Endeavor reported its 90-day cumulative boe/d per 1,000-ft lateral increased 10% to 9,223 this year, compared to a year ago and up 26% from the 2016 level. “We don’t have a step change in proppant nor a step change in water to drive those,” Robertson said. “We’re using relatively average metrics on those two things, and we feel like we’re delivering really compelling results at lower costs.”

In addition, Endeavor reduced its lease operating expenses per boe by about 13% in first-quarter 2018, compared to a year earlier as it lowered drilling times while drilling deeper. This comes as the company shifts from two- and four-well pads to eight-, 10- and 12-well pads and its net operated horizontal production rises.

Endeavor’s net operated horizontal production doubled from just over 10,000 boe/d in first-quarter 2017 to more than 20,000 boe/d in first-quarter 2018. The company exited March with more than 26,000 boe/d in net operated horizontal production.

“We’re taking a $34 margin on our total portfolio; our recycle ratio is over 3x,” Roberson said. “If we look at only what we are truly investing our dollars in—the horizontal wells—our recycle ratio is over 4x. Those are the types of things you want to invest in all day as much as you can afford.”

“On a gross revenue per lateral foot basis, we’re generating tremendous revenue relative to peers. … We’re going to spend the same or a fewer dollars and get far better well productivity,” he said. “We take that as a clear sign that our well productivity per well is in the right place and growing, that the acreage that we are choosing to develop is also in the right place and we’re fortunate that most of that acreage is in the core of the basin.”

Velda Addison can be reached at vaddison@hartenergy.com.