American Oil and Gas Reporter - PBIOS 2014 Official Program Guide - 136

Permian Basin Reports
four vertical rigs running in the Midland
Basin, mostly in Midland and Upton
counties, although Harper says the company has acreage in Glasscock and Irion
Counties, too.
"The vertical rigs are drilling traditional Wolfberry wells," he details. "The horizontal wells are primarily Wolfcamp A. We
also drilled our first Spraberry horizontal."
Harper says 80 percent of Concho's
$2.6 billion Permian Basin drilling budget will be spent on horizontal wells. "The
Permian Basin is humbling and exciting,"
he comments. "It reminds us daily to keep
pushing the boundaries, and testing new
zones and completion techniques. Concho
has identified a large inventory, and we take
pride in our execution. We do it as efficiently as anyone."
Kerogen Exploration drilled a
vertical pilot to 14,400 feet running "every log known to man,"
then drilled its first Woodford
Shale horizontal well, the Edwards-1, to a total measured
depth of 19,109 feet. The company was drilling its second horizontal well in August while waiting to fracture the first.

Basin wells averaged 491,000 boe/d, a 55
percent increase over second quarter 2013
and a 16 percent increase over first quarter 2014.
In the northern Delaware Basin, he says,
31 new wells had at least 30 days of production by the end of the second quarter
and set production-rate records with average 30-day rates of 931 boe/d (81 percent
oil). The wells also recorded average 24hour peak rates of 1,420 boe/d from average lateral lengths of 5,034 feet.
In the southern Delaware Basin, eight
new wells had at least 30 days of production by the end of the second quarter, according to the company's earnings report,
and averaged 30-day rates of 1,093 boe/d
(81 percent oil). Peak 24-hour rates averaged 1,301 boe/d from average lateral
lengths of 5,401 feet.
Development Mode
"Where we can, we are trying to drill
longer laterals, depending on lease configuration," Harper remarks. "We would

love to drill laterals up to two miles
long."
He says the number of frac stages employed by Concho ranges from 12-14 to
30, depending on the reservoir and the design of the well. Concho is in a development mode in certain areas of the Delaware
Basin, according to Harper.
"The state-line area is the closest we
have to being in development mode," he
contends. "The southern Delaware Basin
is earlier in its life cycle."
While the Delaware Basin is the company's primary focus, Harper says Concho
also has two rigs drilling the New Mexico Shelf in Lea and Eddy counties.
"Historically, the shelf has been drilled
vertically," Harper recalls. "We can drill as
close as 10 acres for vertical wells, but we
are targeting the Paddock and Blinebry
zones of the Yeso with horizontal wells,
also. These wells are much shallower
(2,500-7,000 feet, depending on the location on the shelf) and are less expensive."
Concho also has five horizontal and

136 THE AMERICAN OIL & GAS REPORTER

Shifting Paradigms
Tall City Exploration was formed in
May 2012, specifically to become involved in the horizontal Wolfcamp Shale
play.
"(President) Joe Magoto and I had an
office together," recalls Midland native
Michael Oestmann, the company's CEO.
"We both had been involved in the early
days of the Wolfberry, but it was all a vertical concept."
Oestman had worked for Pure Resources, a partner with Henry Resources,
which developed the Wolfberry concept,
and Magoto also had been involved in
commingling those multiple zones with
vertical wells.
"The thinking was you couldn't do horizontal wells because there were 11 zones
to fracture," Oestman recounts. "But in the
fall of 2011, all the horizontal activity was
getting started. We looked at each other,
said, 'Here comes another boom.' We
decided we needed to play."
The pair raised the money, receiving a
$300 million commitment from Denham
Capital, and formed the new company.
They then acquired 15,000 acres in Reagan County, 70,000 acres in Howard
County and a small position in neighboring Borden County, and began drilling.
Tall City has drilled 16 horizontal
wells, mostly in the Wolfcamp A and B
zones. Oestman says the company drilled

American Oil and Gas Reporter - PBIOS 2014 Official Program Guide

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