By OGJ editors
HOUSTON, Nov. 8 -- SandRidge Energy Inc., Oklahoma City, is expanding activity in a horizontal play for oil in the Mississippian formation on the Anadarko basin shelf in northwestern Oklahoma as part of the company’s transition to liquids production from gas.
The company has completed 20 wells and said completion results have exceeded expectations and that it may monetize part of its acreage in 2011.
The core of the play involves drilling horizontal wells in existing vertically drilled and producing reservoirs in Woods, Alfalfa, and Grant counties, Okla., along the Kansas line. SandRidge, which has leases in both states, hopes to enlarge its acreage holding to 500,000 acres by yearend 2010 from the current 400,000 acres that contain 1,200-2,500 potential drilling locations.
The company sees operated activity at 10 rigs in the 2011 first quarter compared with eight at yearend and five at present. It will drill more than 100 Mississippian wells in the coming year and drilled its first well in January 2010. Rigs, services, and infrastructure are readily available.
Most leases have 3-year primary terms with 2-year options. With 10 rigs, the company believes it can hold 250,000 acres, the spread it originally viewed as optimum for SandRidge.
Assuming Oct. 28 strip pricing, the expected rate of return is 100% based on a type curve of 386,000 boe on expected ultimate recovery of 300,000-500,000 boe/well, 53% crude oil. Estimated cost to drill and complete a well, including salt water disposal facilities, is $2.7 million.
The expansive carbonate stratigraphic trap is 250-500 ft thick at 6,000 ft true vertical depth with porosity developments of up to 100 ft. Thousands of vertical wells penetrate the reservoir.
The company’s shift to oil will continue in 2011, as the company runs only a single rig at Pinon gas field in the Texas Val Verde basin. With Permian basin acquisitions and success in the Midcontinent Mississippian oil play, SandRidge hiked its 2010 capital budget to $1.1 billion from $875 million and set its 2011 spending at $1.1 billion. It expects to drill more than 900 oil wells next year.