SandRidge developing West Texas Overthrust

By OGJ editors
HOUSTON, Nov. 7 -- SandRidge Energy Inc., Oklahoma City, expects to be operating 20 rigs in the West Texas Overthrust by the end of 2008, down from 27 rigs in early November and a third quarter average of 34.

SandRidge continues to exploit and expand Pinon field using 3D seismic and well control to identify new reservoirs in the three primary thrusts: Dugout Creek, Warwick, and Frog Creek.

The 5.1 tcf of net proved, possible, and probable reserves identified in Pinon field are almost exclusively in the Dugout Creek and Warwick thrusts. The Frog Creek thrust is the most recent of the three thrusts discovered in the Pinon field to have commercial production, SandRidge said.

The Frog Creek thrust provides drilling opportunities in the Caballos chert at 3,500-5,500 ft. The thrust as interpreted from 3D data appears to be similar in size to the Dugout Creek and Warwick thrusts.

Recent production tests from Frog Creek analyzed methane with less than 3% carbon dioxide. The company believes the Frog Creek thrust may contain substantial quantities of reserves that can be developed at or below current Pinon finding costs.

SandRidge drilled 76 wells and completed and placed on production 60 gross wells in the WTO in the quarter ended Sept. 30, when it owned and operated 612 gross wells.

SandRidge shot 265 sq miles of 3D seismic data in the third quarter of 2008, bringing the total shot to date to 1,115 sq miles. The company expects to have 1,250 sq miles of the planned 1,500 sq mile 3D shoot completed by the end of 2008.

SandRidge believes it can use 3D seismic and well control data to highgrade its drilling locations in the multiple thrusts in Pinon field and continue to deliver drilling finding costs below $1.70/Mcf.

The most prolific reservoir at Pinon is the Warwick Caballos chert high CO2 reservoir at 6,000-8,000 ft with average estimated ultimate recovery of 7 bcf/well of total gas based on 125 wells drilled.

Production from this reservoir is limited to 150 MMcfd of inlet high CO2 gas processing capacity of the company's legacy plants. The company is expanding the capacity of existing plants and is building the Century plant.

Century is designed to have 800 MMcfd of processing capacity. The first phase is to start up in the second quarter of 2010, and the second phase is to start in the second quarter of 2011.

Given the current limited availability of CO2 treating capacity, the risk of finding gas containing CO2 at levels above pipeline specifications limits the company's ability to aggressively develop the Warwick thrust.

Once the Century plant starts up in 2010, the company intends to implement a more aggressive drilling program and accelerate production and reserves growth from the Warwick thrust.

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