American Oil and Gas Reporter - June 2014 - 128

SpecialReport: Hot Spots: Permian Basin
these results and will continue to find ways
to improve resource recovery. With ongoing derisking of additional development
zones in the Midland Basin, the future looks
bright for many years of robust activity."
Vertical Plays
While much of the focus in the Permian Basin has turned to horizontal drilling,
there are still plenty of companies finding
success by drilling conventional vertical
wells. Strand Energy, L.C., a Houstonbased private company, has a total of
27,000 acres in three distinct areas of the
basin.
It is drilling in Irion and Sterling counties, Tx., on the eastern slope of the
basin, and has a third area of activity on
the northwest shelf in Gaines County, Tx.,
according to President Kent Brock.
He says Strand is targeting stacked vertical pays in Irion County in the Canyon,
Wolfcamp and Lower Clear Fork formations. In Sterling County, it is pursuing
deeper vertical horizons such as the Fusselman and Ellenburger, as well as a horizontal program in the prospective Cline Shale.
Meanwhile, on the other side of the basin
in Gaines County, Strand is drilling moderate-depth vertical wells in the Lower Clear
Fork, which Brock describes as "the bread
and butter of the Permian Basin."
Strand will drill 30 wells this year, eight
to 10 of which will be in the Permian.
"We have other areas of activity, too,"

Brock elaborates, listing the Eagle Ford,
South Louisiana, East Texas and the western Anadarko Basin. "We like a blended
portfolio of conventional and unconventional. We are a small company and look for
niches. We are careful what we take on."
There is still debate about the viability of the Cline Shale, Brock acknowledges.
"The water saturation appears to get higher as the Cline gets shallower," he observes.
"It is 8,200-8,500 feet deep on our acreage
in Sterling County. We have drilled two
horizontal wells and are planning a third.
We are encouraged with the success we
have had so far in the Cline, but there is
a learning curve. Hopefully, it will be better with time."
Rapid-Fire Drilling
Juno Energy II LLC in Plano, Tx., is focused on a vertical drilling program with
a waterflood in the Clear Fork formation on
the northern end of the Midland Basin, in
Lubbock, Crosby and Garza counties, Tx.
"Since 2007, including a part that we
sold to Sheridan Production Company, we
have drilled 300 wells," reports Juno
CEO Mark Low. "These are shallow
(4,200-4,600 feet) conventional wells.
The first package we bought was making
250 barrels a day. We have taken that up
to 3,200 or 3,300 bbl/d. These wells have
very long lives. Someday, a carbon dioxide flood will come in behind us. It is not
sexy, but with the low operating costs, we

get a lot of bang for our buck. They are
very economical."
He says Juno, which has 35,000 acres
spread across the trend, can drill a well
every four days, and plans to drill more
than 100 this year.
"One of the challenges is the logistics
associated with it, such as permitting," Low
reflects. "The easy part is drilling. There
is a lot of activity. We target turning a well
on 21 days after moving the rig."
One added expense to Juno's program
is that it has to truck all its crude oil production 60 miles to an Occidental Petroleum
pipeline north of Lubbock. Low says he believes it would be economical for someone
to put in a pipeline connection to serve the
production in the northern Midland Basin.
He mentions that Juno drills its own water wells or buys water from farmers and
then reuses it. "We do baby fracs," Low explains. "We don't treat the water, although we may do a little filtration. We
reuse the water several times before we finally let it evaporate in the pit and then
bury the solids."
He points out that Juno can drill a producing well for $575,000, which includes
stimulation and a new pumpjack. "I can
drill 16 producers for what it costs to drill
one horizontal well," Low claims. "And
these wells have lower decline rates."
He says the vertical Clear Fork wells
have average IPs of 40-50 bbl/d. The Clear
Fork discovery wells in the area were
drilled in the 1950s and most of the development was in the 1970s and '80s, according to Low. He notes activity in the area
had stopped until Juno came back in with
its waterflood in 2007.
Supporting Permian Growth

Juno Energy II LLC is focused on a vertical drilling program with a waterflood in the
Clear Fork formation on the northern end of the Midland Basin in Lubbock, Crosby and
Garza counties, Tx. The company can drill and complete 4,200- to 4,600-foot conventional wells with average initial production rates of 40-50 barrels a day for $575,000, including the cost of a pumpjack.

128 THE AMERICAN OIL & GAS REPORTER

Lucid Energy announced in March
that it had finalized a $200 million revolving credit facility to support the company's
aggressive growth strategy in the Permian Basin. Together with private equity
commitments from EnCap Flatrock Midstream and from management, the credit
facility provides Lucid with $425 million
in total financing.
CEO Michael Latchem says Lucid
started in the Cline Shale in Sterling
County, but was pulled quickly into supporting the Wolfcamp Shale horizontal play
in Irion, Reagan and Crockett counties as
American Oil and Gas Reporter - June 2014

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