American Oil and Gas Reporter - April 2018 - 60

VISION2020
for $525 million. The sale provided a big gasp of needed
financial air, enabling us to pay down all of our remaining debt
and make a $250 million equity distribution to our new shareholders. The sale, coupled with improving operating performance
and reductions in operating and administrative costs, enabled
us to have more than $100 million cash on our balance sheet
and a new, undrawn revolver with a $106 million borrowing
base, providing $200 million in liquidity coming into 2018.
Today, Samson's focused portfolio features 150,000 net
acres in the prolific Powder River Basin, and just under 50,000
net acres in the Green River Basin, together accounting for
1,370 net identified drilling locations. Our strategy is to have a
balanced, lower-risk growth approach while maintaining a very
balanced capital structure and a low leverage level of 1.5x
EBITDA or less.

While the big shale plays tend to steal the
Q: spotlight,
activity in the Greater Green River
Basin is picking up as operators develop a number
of stacked formations. Tell us about Samson's assets
in the Green River, particularly the Fort Union property in Sweetwater County, Wy. What makes the
basin such a good strategic fit for your long-range
corporate objectives? What formations are you
drilling? What approaches are you using to drill
and complete these wells? How are the initial wells
performing, and what are the general expectations
for future wells?
MILLS: We have approximately 50,000 net acres in the
Green River Basin and are excited about the potential from this
asset. Our property is primarily a liquid-rich gas asset producing
from the Fort Union, Lance and Lewis formations. We recently
sold our Wamsutter assets, which were predominantly nonoperated,
and we did not have sufficient contiguous acreage to be able to
operate horizontal wells in the Mesa Verde/Almond/Fox Hills
play. Our attention is on our Fort Union asset, which is a 1,000foot gross column of hydrocarbon-charged sands.
The company originally leased these lands in 2012, made
the decision to drill horizontally and had some strong preliminary
results. The challenge was that the drilling costs were too high,
and in a falling commodity price environment, it became uneconomical to drill the wells horizontally. In addition, the Fort
Union sands are interlaced with coal seams, which make staying
in zone challenging and act as frac barriers.
We have re-tooled our thinking and recently have gone back
to drilling these wells vertically. We believe we can reduce the
drilling costs by employing current drilling practices of pad
drilling along with larger frac sizes and approach it as a gas
manufacturing process with tighter drilling patterns and common
surface facilities. We commenced with a four-well drilling
program late last year and learned a lot from the program. The
first two wells were challenging drilling as we fought continual
mud losses and circulation problems in the Fort Union and constantly having to backream to get out of the hole. The last two
60 THE AMERICAN OIL & GAS REPORTER

wells were drilled as a pad program and we saw much improvement in costs and drilling performance, as we modified and improved our mud and bit program.
We currently are evaluating the reservoir performance, but are
pleased with what we are seeing. We intend to bring in one rig as
soon as the drilling season opens in the summer of 2018 and drill
12 wells and employ what we learned from the four-well program
to reach our objective of a gas manufacturing program.

To the northeast of the Green River, Samson
Q: also
is preparing to embark on a drilling
program in the Powder River Basin in the second
half of 2018. Similar to the Green River, the Powder
River contains multiple stacked horizontal conventional and tight oil targets. What formations are
you targeting? How many wells are on the drilling
docket this year in the basin? What drilling and
completion techniques are you using? How much
associated gas are you anticipating in the production
streams? Are there capacity take-away constraints
in the basin?
MILLS: We are one of the larger leasehold owners in the
Powder River Basin with approximately 150,000 net acres across
the western edge of the basin. We have been acquiring additional
leasehold and participating as a nonoperator with some of the
leading operators in the basin during 2017 as we learn more
about the best drilling and completion practices to employ in the
basin when we pick up our first operated rig this May or June.
The Powder River has more than 4,000 feet of overpressured
oil-bearing sands and shales. Our focus is primarily the unconventional reservoirs, the Niobrara and the Mowry formations.
We also are planning on targeting the Shannon and Frontier/Turner
conventional formations in our operated drilling plans.
For 2018, we plan to drill and participate in 13 gross wells,
with more than 50 percent targeting the unconventional reservoirs.
We believe the Niobrara and Mowry represent the upside in the
basin, and we intend to utilize modern drilling and completion
practices to derisk our acreage position. We do not have plans to
do any pad drilling this year, as we hope our plans will derisk
meaningful areas of our extensive acreage holdings. These will
not be inexpensive wells to drill and complete, with a Mowry test
costing approximately $12 million-$13 million a well. Our hope
is to drive these costs down substantially over time with pad
drilling and improving cycle times. We plan on employing larger
completion designs than have been used historically in the basin,
with frac proppant in the 2,000+ pounds per stage size.
So far, most of the wells we have participated in are 60-80
percent oil producers with associated gas and natural gas liquids.
Fortunately, we have not seen any take-away constraints, but
with a growing rig count in the basin, it will only be a matter of
time before we see constraints. The good news is a number of
midstream providers are planning ahead and we see a number
of processing plant expansions under way or being planned,
and with ONEOK's Elk Creek NGL pipeline coming from the
Bakken, it will help alleviate any anticipated NGL take-away



American Oil and Gas Reporter - April 2018

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Contents
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