American Oil and Gas Reporter - June 2018 - 60

SpecialReport: Permian Basin Activity
conservative.
"Of the 158 wells we have drilled, 92
had initial production rates greater than
1,000 boe/d," he comments. "And that is
across all of our acreage across all zones."
San Andres

Acquisitions in Cochran County, Tx., have given Energy Hunter Resources approximately
19,000 acres in the Slaughter-Levelland Field. Along with about 100 potential drilling
locations for horizontal wells in the San Andres formation, the company says the
transaction also brought 370 existing wells.

"We took over operatorship of Moss
Creek in March 2016," Guidry explains.
"At that time, production was 6,500 boe/d
and it had one rig running. We now have
seven rigs running and Moss Creek is
producing 34,600 boe/d (as of March).
We have seen significant growth."
During the past two years, Surge has
drilled 158 horizontal wells in Moss
Creek, targeting the Wolfcamp A and B
zones, as well as the Spraberry horizon.
He says the company plans to spud about
120 wells in 2018 and bring approximately
140 wells on line this year.
"The Wolfcamp A has contributed the
most to our value in Howard County,"
Guidry continues. "Our primary target
in Borden County is the Wolfcamp A,
too, although we have producing wells
in the Wolfcamp B and Spraberry. Borden
County is pushing the Midland Basin's
northern limits."
He points out that Surge is drilling
laterals as long as land requirements
allow. For example, the units already
were set up in Howard County before
Surge's acquisition, limiting laterals to
1.5 miles primarily, with the exception
of several two-mile ones. In Borden County, however, where the previous leaseholders had, for the most part, not established units, Guidry says the company's
laterals extend between 2.0 and 2.5 miles.
"We believe there is better efficiency
60 THE AMERICAN OIL & GAS REPORTER

and better economics with the longer laterals," he affirms.
Like many throughout the industry,
Surge is employing tighter fracturing density, Guidry continues, which has resulted
in higher initial production rates. Additionally, he says, the use of regional sand
during fracturing operations has reduced
completion costs significantly. Depending
on topography, the company utilizes pad
drilling to increase capital efficiency.
These pads can hold between four and
eight wells targeting multiple zones, though
not necessarily always at the same time,
he says, but always with an eye toward
building the pads to enable a later return.
"Howard County has been better than
we thought when we made the acquisition," he admits. "The Wolfcamp A has
been the big value driver. It is too early
to tell in Borden County, but we believe
that it, too, will exceed our initial expectations. Prices have increased since we
took over in 2016, which has helped. We
have been drilling wells consistently for
the last two years. Even with the depressed
prices in 2016, these wells' break-even
rates are very low."
Guidry lists estimated ultimate recovery
rates of 850 MMboe, which is based on
Ryder Scott, an independent reserve auditor's estimate for a well in the Wolfcamp
A in Howard County. But with only two
years of data, he predicts that number is

The Permian Basin has produced 30
billion barrels of crude oil during the last
80 years, and more than 40 percent of
that-about 12 billion barrels-has come
from the San Andres formation, calculates
Gary C. Evans, the chairman, chief executive officer and founder of Energy Hunter
Resources Inc.
He indicates the San Andres, a shallow,
conventional, stratigraphically compartmentalized carbonate reservoir that produces oil at approximately 5,000 feet, is
drawing new attention as a horizontal
play. "It is all about economics," Evans
explains. "It costs about $2.5 million$3.0 million to drill and complete a new
horizontal San Andres well compared
with $8.0 million-$10 million for a horizontal unconventional shale well in the
Midland or Delaware basin. Because it
is a conventional reservoir with higher
porosity and permeability, wells in the
play typically require a much smaller
frac job; only about 10 percent of the
frac required on an average unconventional horizontal well in the Midland or
Delaware basin."
Evans says the typical EUR on a San
Andres well is about 400,000 barrels,
which "doesn't get the attention of the
big boys, but for a small or mid-sized
company, it is very attractive. At 400,000
barrels of oil recovery, the internal rates
of return per well exceed 100 percent."
Energy Hunter has expressed plans to
go public in July or August, he reports.
"Going public gives us currency for additional transactions and access to the
public markets for raising future capital,"
Evans states.
The company entered the San Andres
oil play with two recent acquisitions in
Cochran County, Tx., giving the company
about 19,000 acres in what is known as
the historic Slaughter-Levelland Field.
Cochran County is on the Permian Basin's
Northwest Shelf.
Evans says Energy Hunter's acquisi-

American Oil and Gas Reporter - June 2018

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