WPX Energy Makes Discovery in Niobrara Formation
WPX Energy's (NYSE: WPX) successful Niobrara shale discovery in western Colorado has the potential to significantly increase the company's natural gas reserves and daily production in ensuing years.
The discovery well produced an initial high of 16 million cubic feet per day at a flowing pressure of 7,300 pounds per square inch.
The well has since been choked back substantially to optimize reservoir performance and ensure maximum resource recovery. Over the past 30 days, it produced at an average rate of 12 million cubic feet per day.
WPX has the lease rights to approximately 180,000 net acres of the Niobrara/Mancos shale play that underlies the company's expansive leasehold position in the Piceance Basin.
Substantial gathering and processing infrastructure is in place to accommodate additional gas volumes from the area, as is take-away capacity from the basin. Gas produced from the Niobrara and Mancos shales can be processed without modification to existing gas treatment facilities.
WPX has drilled more than 4,000 wells in the Piceance Basin, mostly in the tight sandstones of the Williams Fork formation.
“We have a large-scale position in the Piceance, where we are the lowest-cost, most efficient producer in the basin. We know the Piceance is a world-class asset. Now the results of our Niobrara well are showing that our acreage has even greater reserves potential,” said Ralph A. Hill, president and chief executive officer.
“This exploratory work in the Niobrara and Mancos shales of the Piceance was a logical follow-on to our previous Mancos shale discoveries in the San Juan Basin.
“In the latter half of 2010, we drilled two horizontal discovery wells there that produced at high rates from the same reservoir that we're delineating in the Piceance. The San Juan results already added 1.3 trillion cubic feet of proved, probable and possible reserves to WPX,” Hill added.
“Based on the early indications from this Piceance discovery, we're talking about the potential to ultimately more than double our current 18 trillion cubic feet equivalent of 3P reserves,” Hill said.
The Niobrara and Mancos shales are generally located at depths of 10,000 to 13,000 feet. The Williams Fork is a shallower formation, generally located at depths of 6,000 to 9,000 feet. In the Piceance Basin, WPX holds an average working interest of 66 percent in the Niobrara and Mancos shales.
WPX plans to drill at least two more horizontal Niobrara wells in the Piceance Basin this year, pending permits, starting within a six-mile radius of the first well. This additional work will help WPX evaluate how productive the formation is across the basin. Other operators also are delineating the extent of the resource on the eastern and western margins of the basin.
WPX's first Niobrara horizontal well is located on the company's existing Piceance Valley acreage in Garfield County. It was drilled to a total vertical depth of 10,200 feet with a 4,600-foot horizontal lateral.
Drilling operations commenced in August 2012 during which the company successfully recovered 535 feet of continuous core. Completion operations, including 17 frac stages, were completed in December.
WPX previously drilled a vertical Niobrara test well in late 2011 that yielded the impetus for drilling the first horizontal well to gain additional data about the productivity of the formation.
Steven G. Natali, senior vice president of exploration for WPX, commented, “As we study what our geoscience and operations teams have achieved in the Niobrara and Mancos shales, we're seeing hydrocarbon saturation across tremendous thickness in a highly over-pressurized environment. These shales are located directly underneath our current Williams Fork production in the Piceance.
“Advances in horizontal drilling and the way that our completions engineers apply multi-stage fracture technology means that much of this gas can eventually be brought to the surface at an economic rate,” Natali added.
About WPX Energy, Inc.
WPX Energy is an exploration and production company focused on developing its significant oil and gas reserves, particularly in the liquids-rich Piceance Basin, the Bakken and Three Forks oil shales and the Marcellus Shale. WPX also has domestic operations in the San Juan and Powder River basins, as well as a 69 percent interest in Apco Oil and Gas International. Go to http://www.wpxenergy.com/investors.aspx to join our e-mail list.
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the company. Statements regarding future drilling and production are subject to all of the risks and uncertainties normally incident to the exploration for and development and production of oil and gas. These risks include, but are not limited to, the volatility of oil, natural gas and NGL prices; uncertainties inherent in estimating oil, natural gas and NGL reserves; drilling risks; environmental risks; and political or regulatory changes. Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. The forward-looking statements in this press release are made as of the date of this press release, even if subsequently made available by WPX Energy on its website or otherwise. WPX Energy does not undertake and expressly disclaims any obligation to update the forward-looking statements as a result of new information, future events or otherwise. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at WPX Energy, Attn: Investor Relations, P.O. Box 21810, Tulsa, Okla., 74102, or from the SEC's website at www.sec.gov.
Additionally, the SEC requires oil and gas companies, in filings made with the SEC, to disclose proved reserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, under existing economic conditions, operating methods, and governmental regulations. The SEC permits the optional disclosure of probable and possible reserves. From time to time, we elect to use “probable” reserves and “possible” reserves, excluding their valuation. The SEC defines “probable” reserves as “those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC defines“possible” reserves as “those additional reserves that are less certain to be recovered than probable reserves.” The Company has applied these definitions in estimating probable and possible reserves. Statements of reserves are only estimates and may not correspond to the ultimate quantities of oil and gas recovered. Any reserve estimates provided in this presentation that are not specifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by, the SEC‘s reserves reporting guidelines. Investors are urged to consider closely the disclosure in our SEC filings that may be accessed through the SEC's website at www.sec.gov.
The SEC's rules prohibit us from filing resource estimates. Our resource estimations include estimates of hydrocarbon quantities for (i) new areas for which we do not have sufficient information to date to classify as proved, probable or even possible reserves, (ii) other areas to take into account the low level of certainty of recovery of the resources and (iii) uneconomic proved, probable or possible reserves. Resource estimates do not take into account the certainty of resource recovery and are therefore not indicative of the expected future recovery and should not be relied upon. Resource estimates might never be recovered and are contingent on exploration success, technical improvements in drilling access, commerciality and other factors.
WPX Energy, Inc.
Kelly Swan, 539-573-4944
David Sullivan, 539-573-9360