American Oil and Gas Reporter - June 2021 - 48

SpecialReport: Permian Basin Activity
Energy Partners, and Grey Rock Energy
Partners. Although 80% of its position is
in the Midland Basin, Henry Resources
continues to develop Delaware acreage
in Reeves County, Tx., where it has drilled
eight wells over the past two years targeting
the Wolfcamp A and C, Bledsoe
says.
" Those are great wells, and make more
oil than the Midland Basin wells, but
they also make more water and you have
to be careful about how you frac them
because you can bring in a lot of hydrogen
sulfide, which is very costly to treat, " he
explains. " We are extremely careful and
very deliberate about how we complete
those wells. They make more oil but cost
more money, so the economics in general
are a little better in the Midland Basin. "
With roots in a firm co-founded by
Permian Basin legend Jim Henry more
than 50 years ago, Henry Resources relies
on a formidable land program with expertise
in putting together creative deals in a basin
with little unleased acreage, he says. The
focus is on bringing to the table parties
with partial interests or rights, he says.
The Henry name opens doors with
rights holders and other producers, a testament
to Jim Henry's legacy, Bledsoe
adds. " Our calling card is being a company
of integrity that operates on Christian
values and that values being a good
partner that in turn values win-win deals, "
he says. " That is how you keep deal flow
going, by being a good partner and being
an attractive company. "
Second To None
While the Delaware and Midland
basins are the primary Permian attention
getters, the Northwest Shelf is offering
opportunities for Steward Energy II LLC,
which is using unconventional technologies
to develop oil reserves beneath and beyond
the historical boundaries of legendary
conventional Permian fields, says Founder
and CEO Lance Taylor.
Based in Frisco, Tx., the company is
drilling horizontal San Andres wells on
its acreage surrounding the historic Wasson
and Brahaney fields, he says. Steward II
plans to drill 16 wells this year with the
goal of moderate production growth while
maximizing distributable cash flow, adds
Taylor, a fifth-generation oilman who
launched the company in July 2015. So
far, he says, Steward II has drilled and
completed eight wells through midyear.
" The shallower conventional rock leads
to more affordable drilling and completion
operations while delivering a lower decline
production profile, " Taylor points out.
" When done well, the economics are second
to none. "
A petroleum engineer by training,
Taylor held positions with Anadarko Petroleum,
Pioneer Natural Resources, Denbury
Resources and Eagle Oil & Gas before
founding Steward Energy LLC in
August 2012 in a partnership with Natural
Gas Partners. Steward I built and commercially
tested a 10,000-acre position
in the southern Delaware Basin and sold
it in late 2014.
With NGP's continued sponsorship,
Steward II is taking advantage of the San
Andres formation's natural permeability,
combined with hydraulically fractured horizontal
wells to maximize near-wellbore
conductivity, Taylor says. The company
pumps less than 1,000 pounds of proppant
carried in less than 20 barrels of slurry per
lateral foot pumped at a rate of more than
70 bbl/minute, he reports. According to
Taylor, proppant is typically 30-50 mesh
and the fluid system requires high-quality
cross-linked gel. Gas-to-oil ratios initially
average 1,000-to-1, with typical 30-day
initial oil production rates of 500-600 bbl/d.
All of the company's produced water
is piped to its own disposal wells, he
says. Steward II also has an active workover
program that involves mechanically cleaning
out and chemically treating calcium
sulfate scale with a hydrochloric acid
treatment, yielding additional reserves for
a relatively small investment, Taylor says.
Currently, the company's production
is 13,000 net boe/d with proved reserves
greater than 100 million boe, Taylor
details. Currently, the company operates
150 horizontal San Andres wells, which
represents about half of its proved inventory,
and continues to keep an active interest
in accretive acquisitions.
Building A Position
At the beginning of June, Midlandbased
Custer & Wright Operating was
set to spud a horizontal San Andres well
for completion by mid-summer as part
of its program to methodically build a
position westward from its Northwest
Shelf acreage in Yoakum and Gaines
counties, Tx., says company engineer
Dustin Petraitis.
" There are good wells up there, " he
remarks. " For all the prospecting and
moving around in the Permian Basin, I
have found few places that work better
than the San Andres. "
Steward Energy II is deploying unconventional technologies to develop new reserves in
the San Andres play, where the company plans to drill 16 horizontal wells this year. It operates
150 horizontal San Andres wells, representing about half of its proved inventory.
48 THE AMERICAN OIL & GAS REPORTER
Still, location selection is paramount
on acreage offset to the Slaughter Field,
with some locations providing lucrative
possibilities and others being suspect,
Petraitis cautions.
Company President Paul Wright and
his founding partner, the late Art Custer,

American Oil and Gas Reporter - June 2021

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