Niobrara oil play fans out near Chugwater, Wyo.

By OGJ editors
HOUSTON, Feb. 28
-- The northwest edge of the Denver-Julesburg basin seems in for a round of spirited drilling due to the horizontal Niobrara shale oil play.

Various operators have received permits to drill well over 100 wells in a nonproducing area in northwestern Laramie County, Wyo., between Silo oil field and the Chugwater community.

Prominent operators EOG Resources Inc., Chesapeake Energy Corp., Noble Energy Inc., and Barrett Resources Corp., are joined by private companies on those permits. Drilling has hardly begun.

Recovery Energy Inc., Denver, an independent focused on the Denver basin, will close Mar. 4 on the purchase of 8,060 net acres from Wapiti Oil & Gas LLC for $12.3 million in cash and stock. The deal will give REI 14,400 contiguous gross acres in its Chugwater block.

REI will operate its first well in the second quarter of 2011 as soon as a suitable rig is available. It has signed a joint venture agreement with an undisclosed private independent that will pay 100% of the cost of two horizontal Niobrara wells and carry REI for a 40% working interest in each. REI is seeking a total of four drilling permits.

REI expects to encounter Niobrara, which it believes will have intense natural fracturing, at 8,300 ft true vertical depth, and then drill a 4,500-ft lateral, said Roger A. Parker, chairman and chief executive officer. The first location is in 19n-67w.

REI’s block is about 8 miles south of Chugwater and 10 miles northwest of the northwest edge of Silo field, a vertical 1981 Niobrara discovery redeveloped horizontally in the early 1990s.

“There are 122 recently permitted horizontal Niobrara wells within three to four townships around us,” Parker said.

REI’s team is interested in conventional and unconventional formations in the basin. The company is drilling J sand development wells in Grover field, Weld County, Colo., where it just closed the acquisition of 1,700 acres from private individuals. That deal also included 6,600 net acres in Goshen County, Wyo.

Parker said the company also plans to exploit the Niobrara at Grover, just east of where EOG Resources kicked off the present horizontal Niobrara play with the Jake well in 1-11n-63w (OGJ Online, Apr. 7, 2010).

“The acquisition in the Grover field complements our positions throughout the northern half of the DJ basin giving us significant exposure in what we believe will be both the matrix porosity and naturally fractured areas of the Niobrara shale,” Parker said.

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