Oil And Gas Firms Doe-Eyed On Powder River Basin
May 7, 2018
Some of Wyoming’s big players recently announced how well they started the year, with Devon Energy, EOG Resources and Chesapeake Energy all noting successes in the Powder River Basin.
The region has seen an impressive uptick in applications to drill, part of a rush that has state regulators juggling a record 10,000 applications-to-drill backlog. As the price pushes toward $70 a barrel, the back burner play is getting attention again.
Here are some highlights from investor calls from operators this week:
The time it takes to drill a well in the Powder River Basin, and the Denver Basin, is down by 70 percent since 2014, said David Trice, vice president of exploration and production for EOG, in a call with investors Friday.
From spud to total depth the company averaged nine days in the Powder last year and seven and 1/2 days so far in 2018, he said.
“The efficiency gains we are making in both the Powder River Basin and DJ Basin are astounding,” Trice said.
The Houston-based firm had a strong first quarter. Revenue was up from last year by 41 percent, or more than a billion dollars. The company reported net earnings of $639 million.
With efficiencies in the field and a focus on eliminating debt, the company’s executives said EOG would continue to be successful even if the price of oil falls from its current high.
One of the Powder River Basin’s most lucrative oily layers is the Turner formation, and Chesapeake is seeing strong returns. The company is considering adding a fourth rig in the basin to tap the Turner. It placed six Turner wells on production in April. Chesapeake’s first Turner test well was drilled just a year ago, said CEO Robert Douglas Lawler.
“Today, after roughly 400 days of production, (that well) continues to deliver strong results, averaging more than 500 barrels of oil and 1.5 million cubic feet of gas per day for the month of April 2018,” Lawler said.
“This is important because there are very few wells in the United States that produce 500 barrels of oil one year after coming online.”
Chesapeake reported a net income of $268 million in the first quarter. The Oklahoma City-based company was the largest gas producer in the country before the downturn. After bankruptcy, it scaled down. It is the fifth-largest oil producer by volume in the state so far in 2018.
The company is one of five proposing a large oil and gas project in Converse County with as many as 5,000 new wells over 10 years.
With the price of oil holding strong, Anadarko is anticipating a rise in service costs, CEO Robert Walker said in a call with investors Tuesday.
“So far, we haven’t seen it work its way into requirements in the first quarter, but it’s just hard to imagine as we move through this environment that we’re in today ... that we are not going to see some modest amount of service cost increase,” Walker said. “I think the challenge is can we offset it with better efficiencies, and that’s a coming attraction.”
The company did not mention its Wyoming intentions with investors. Revenue was down compared to last year for the Woodlands, Texas firm. It reported a net income of $121 million.
Anadarko is also a collaborator on the 5,000 well proposals in the Powder River Basin.