The revival of oil production in the Permian Basin is one of the more exciting developments since the emergence of light tight-oil development. While operators are beginning to reach cruising altitude farther south in the Eagle Ford, the Permian remains full of opportunity. Operators have published substantial increases to their estimates of potential resources in the basin so far this year, and next year we are likely to see more of the same.

One of the more tantalizing drivers behind these increases is drilling and completion work to the north of Upton, Reagan and Irion counties in the Midland Basin. Laredo Petroleum Inc. fired the first salvo in this area in late 2010, drilling for Cline (and then Wolfcamp) in Glasscock County, followed by Apache Corp. and, most recently, Energen Corp. Laredo's Wolfcamp results have been strong enough to cause it to put its Cline program on hold.Its first 31 Wolf-camp A wells have averaged a 24-hour rate of 1,054 barrels of oil equivalent per day (BOE/d), along with an average 30-day rate of 767 BOE/d.

The company has begun testing the Wolf-camp B and C layers, with seven wells completed so far—including the superlative Lane Trust C/E 42-2HL (24-hour peak of 2,147 BOE/d, 30-day rate of 1,406 BOE/d).Energen's Lavaca 38 #101H, whose peak rate of 898 BOE/d was announced in late July, triggered an upgrade of the company's estimated Wolfcamp inventory to 2,007 locations, vs. its previous assessment of 785 locations.

Pioneer Natural Resources' first six wells, drilled farther west (ie Midland and Martin counties), have been show-stoppers.The company's first horizontal in Midland County, a Wolfcamp B well completed in January of this year, had a peak 24-hour flow rate of 1,693 BOE/d, with oil cut of 73%.After only nine months on line, the well has already produced 170,000 BOE.The company has since completed five more wells testing three out of the four Wolfcamp layers on its acreage: They have flowed at 24-hour peak rates ranging from 1,439 BOE/d to 2,597 BOE/d (normalized to a 7,500-foot lateral length).

Pioneer's results garnered the attention of the Wall Street set, which promptly began looking for other companies with exposure to these counties. There are a handful of operators in the early stages of delineating and testing for Wolfcamp potential, from Midland to as far north as Dawson County. Though they have not shown initial production rates as strong as Pioneer's, the early results seem, on balance, to justify some optimism.

Diamondback Energy, a small, pure Permian player that went public only last year, has published results on nine Wolfcamp wells so far.The company has experimented with a variety of horizontal lengths in Midland and Andrews counties, and has succeeded in breaking the 1,000 BOE/d barrier (when normalizing to a 7,500-foot lateral) on six of those wells.The company plans to push farther north still, having been granted a new drill permit for a Dawson County horizontal.

W&T Offshore, a more recent entrant to this area, has had two encouraging well results in Martin County but encountered problems in its Andrews County horizontal. Another operator active in the area, the privately held RSP Permian LLC, has filed three completion reports with the Railroad Commission, including an impressive 858 BOE/d test result for a short-lateral well (3,750 feet).

If operators can continue to gain a greater understanding of how to deploy horizontal wells in the Permian at lower costs, the running room available for ramping up production will only grow.The results obtained in extending the Wolfcamp farther north are one particular element of this story that deserves close attention.

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