WPX Energy of Tulsa cited lower well costs and a 25% increase in estimated ultimate recovery rates as it vowed to increase its activity in the Williston basin during the second half by resuming completions and increasing its rig count to three from one rig by Dec. 31.
The decision followed what the company calls significant process improvements, structural changes to lower costs, successful discussions with key vendors, a technical analysis of WPX's well performance that led to higher EUR rates, and the use of larger stimulations.
WPX's estimated drilling and completion costs in the basin are approaching $8 million per well being completed using 6 million lb of sand, representing a decrease of more than 30% percent vs. its 2014 average.
"The combination of cost reductions and higher EURs gives us the opportunity to generate returns in excess of 30% in today's commodity price environment," said Rick Muncrief, WPX president and chief executive officer. WPX made incremental completion design changes in late 2014.
"This helps set us up for 20% oil volume growth in 2016," Muncrief said. "We're realizing the value we have on this acreage to a fuller extent through technical excellence, improving the way we develop the asset, and looking at the operations through a new lens."
WPX holds more than 85,000 net acres in the core Williston basin and reported proved reserves of 119 million boe for its Williston operations as of Dec. 31, 2014.
WPX resumes completions
The company had 14 Williston wells awaiting completion as of June 25. This work was scheduled to resume in August, starting with a four-well pad.
WPX is scheduled to test 10-million-lb stimulations with more stages, more entry points, and a higher pump rate in the second half of 2015, using 100% sand on its Williston wells. The company previously used a combination of sand and ceramic proppant.
Completion modifications for WPX include moving toward a higher intensity slickwater design targeting the potential to increase initial production rates and EURs even further.
"Increasing the stimulation size is about pursuing additional upside for our EURs. The collaboration we're seeing from service providers makes this the perfect time to proceed," Muncrief added.
The company estimates $9 million drilling and completion costs per well for the 10-million-lb stimulations.
WPX had rig deployed on its Williston acreage in June. The company planned to add a second rig in August and a third in November.
Funding for additional Williston activity primarily will be derived by redeploying cost savings and reallocating capital from its Piceance basin operations.
WPX in July agreed to buy privately held RKI Exploration & Production LLC of Okahoma City for $2.35 billion.
A Tulsa independent, WPX wants to produce more oil as it shifts its focus from natural gas.
WPX is getting RKI's 92,000 acres and associated infrastructure in Loving County, Tex., and Eddy County, NM, both in the Permian basin. WPX develops and operates oil and gas properties in North Dakota, New Mexico, and Colorado.
