American Oil and Gas Reporter - June 2022 - 54

SpecialReport: Permian Comeback Kings
in Reeves County, the company turned
in line three U-laterals and three standard-reach
laterals (SRLs). With approximately
three months of production history,
the U-laterals are trending at or above a
1.5 million boe estimated ultimate recovery
while the SRLs are trending to a 700,000
boe EUR, according to 2022 guidance
released in late May.
The wells were drilled on eight-ten
Ring Energy plans to invest
$130 million in capital this
year to drill 30-33 San Andres
horizontal wells on the
Central Basin Platform and
Northwest Shelf. Year-overyear
production growth is
anticipated to range from
6% on the low end to double
digits on the high end.
this is still a conventional reservoir and
the porosities and permeabilities are still
considerably higher than in shales. "
On the shelf, development is centered
Yoakum County, Tx., but includes properties
in adjacent Lea County, N.M., he
says. Ring is developing Central Basin
Platform acreage in Gaines and Andrews
counties in Texas. Companywide production
of just under 9,000 boe/d is 85% oil
across the structures.
McKinney and his team came aboard
in late 2020, and decided that a large
amount of legacy acreage could not be
allowed to expire without testing different
landing zones and completion techniques.
For its 2022 drilling program, Ring decided
to drill its first four wells in the CBP, all
of which came in within expectations,
and with one having an IP in excess of
500 barrels of oil a day, McKinney notes.
Although reservoirs across the shelf
and platform lack the ubiquitous spread
of stacked pays in the Midland and
Delaware basins, their initial producing
and terminal declines are much shallower
and well drilling and completion costs
are considerably lower, " allowing the
economics to be equal or even superior
to many of the shale plays, " he says.
The company plans to spend $130
million in capital this year with only
40% of planned oil production hedged
and the remaining oil and natural gas
54 THE AMERICAN OIL & GAS REPORTER
volumes fully exposed to market prices.
Production growth could range from 6%
to double digits, he predicts.
The company is actively marketing
just over 18,000 net acres in the shallow
Delaware Basin considered noncore,
McKinney says. The position has produced
water, gas gathering and pipeline
infrastructure, a long-life and shallow
decline PDP base, and 98% working interest,
he notes.
U-Lateral Designs
PDC Energy Inc. says its deployment
of " U-laterals " (two-mile equivalent extended-reach
laterals in one-mile sections)
is expected to continue to bolster output
in the Delaware Basin.
The Denver-based company, fresh off
the closing of its acquisition of Great
Western Petroleum LLC to expand its sizable
Wattenberg position in Colorado, is
deploying new well designs and completion
practices in the Permian as it spends a
budgeted $175 million drilling 16 wells
and completing 20 this year, says David
Lillo, senior vice president of operations.
In the Delaware Basin, PDC continues
to be encouraged with its 2022 turn-inline
program as results from relaxed spacing
outperform expectations, Lillo said
during the company's first-quarter earnings
call in early May.
For instance, on the Old Monarch pad
well per-section equivalent spacing in the
Wolfcamp A and B, where a U-lateral
utilizes two lateral spaces. The company
expects to add additional U-shaped lateral
locations to its inventory where appropriate,
Lillo says. The company also was testing
a 2nd Bone Spring well, which was in the
initial phase of flowback in early May.
" We are proud of the team's use of
technology to drill these types of wells, "
Lillo remarks. " So far, the initial results
are right on expectations, and we continue
to look for other ways on our acreage to
apply this technology to organically
expand our inventory. "
PDC continues to consider potential
acreage trades and small bolt-on acquisitions
to consolidate and build on its position,
he says.
The company produced a steady
28,000 boe/d in the Delaware in the first
quarter, but expects a ramp up in output
as new wells are turned on line, Lillos
says. Throughout the company's development
work, its Delaware team continues
to produce at the high end of expectations
with improvement also stemming from
workover and an electric submersible
pump installation program, he details.
" That, and higher-than-expected chemical
prices drove LOE to a higher-thanexpected
level, but the revenue at the increased
production at these prices is very
economic, " Lillo comments.
In the Delaware Basin and elsewhere,
the company continues to improve environmental,
social and governance performance.
The company plans to reduce
GHG and methane emissions by 60%
and 50%, respectively, by 2025, from
2020 baseline levels and on a per unit
of production basis. In total, more than
25% of the company's short-term incentive
program is tied to ESG and EHS
initiatives.
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American Oil and Gas Reporter - June 2022

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