American Oil and Gas Reporter - May 2019 - 74

SpecialReport: Mid-Continent Activity Update
Cube Development
"The rationale for the acquisition was
to create scale across multiple basins and
to be able to leverage our vendors and
operations to improve returns," explains
Campbell. "Rocks don't know state or
country boundaries, and everything is
replicable from one basin to another. Encana is applying of what it learned in the
Permian Basin to the STACK."
He says Newfield's wells previously
cost about $7.9 million each, but Encana
has set a target of reducing that by more
than $1.0 million a well, which Campbell
says he is confident will be attained this
year.
From using locally-mined and selfsourced sand, which lowers transportation
costs, to a change in the workflow at the
job site, and lowering cycle and drilling
times, he says, Encana has put its focus
on reducing the time between first investment and first return.
Encana is cutting back the number of
rigs it is operating in the STACK, but because of the improvement in cycle time,
it expects to complete nearly the same
number of wells this year, Campbell says.
It plans to go from the 11 rigs Newfield
was running to four rigs by May, he says,
but still will put about 100 wells on line
in 2019. He adds that the company will
go from four completion spreads to running two continuously.
He reports Encana is bringing cube

drilling, which it has employed in the
Permian and Montney basins, to the
STACK, which is a new practice for
Oklahoma. Encana is drilling 10,000foot superextended laterals, similar to
what Newfield was drilling. But instead
of drilling wells in a row, it is drilling
six-eight wells a section in a cube.
"Cubes and row drilling are distinctly
different," Campbell emphasizes. "With
two-mile laterals, you could have six
miles of activity. With cube drilling, you
drill one or two cubes and then come
back in 12-24 months. By doing that, we
are reducing cycle times from 180 days
or more to 90. We are producing revenue
more quickly and are gathering geologic
data at the same time. When we come
back, we have the ability to quickly
modify and optimize our results based
on the knowledge we have gathered from
our earlier program. If we get something
wrong with row drilling, we do not have
the same ability to change."
He says Encana is drilling six Meramec
wells a section. If it drills eight wells in a
section, the other two likely are Woodford.
There is also the potential for production
from the Osage formation in its acreage,
he adds.
Encana's 2019 program is "very
STACK focused" in Kingfisher and Canadian counties, according to Campbell.
He says the company will have only a
limited program in the SCOOP this year.
"The first half of the year, we will be

Following its acquisition of Newfield Exploration's position, Encana Corporation is bringing
cube drilling, which it has employed in the Permian and Montney basins, to Oklahoma's
STACK play. Cube drilling entails
drilling one or two cubes, then returning in 12-24 months to optimize completions based on what
the company has learned, explains Senior Vice President of
Investor Relations and Communication Steve Campbell.

74 THE AMERICAN OIL & GAS REPORTER

focused on well cost reduction," Campbell
emphasizes. "If we can reduce well costs
by $1 million, the STACK will be able to
compete with any play in the country.
The second half of the year we will focus
on improved production from our cube
drilling."
Encana completed its first STACK
cube in April.
Its full-year, pro forma capital budget
for 2019 is $2.7 billion-$2.9 billion,
which includes approximately $200 million associated with Newfield operations
from Jan. 1 through closing the transaction
on Feb. 13. Campbell reports that more
than 75 percent of Encana's capital investments this year will be allocated to
its three core liquids plays: the Permian,
Anadarko and Montney.
Full Development Phase
Clint Calhoun, vice president of resource development for Oklahoma Citybased Chaparral Energy, says his company
has moved from the delineation phase to
multiwell development in the STACK.
Chaparral has approximately 131,000
net acres in the STACK that Calhoun
says provide access to several formations,
most notably the Meramec, Osage, and
Woodford, allowing the company to drill
multiple zones from a single pad location.
It operated four rigs through the first
quarter, but dropped to three rigs in April,
where Calhoun says Chaparral plans to
stay for the remainder of the year.
What makes the STACK attractive to
Chaparral?
"Repeatability," Calhoun replies. "With
multiple zones, lower drilling costs and
strong rates of return, it is very attractive.
Of course, it is close to Cushing, Ok.,
too, which helps to provide a low breakeven cost. The geology is favorable in
the STACK with a world-class source
rock in the Woodford, multiple reservoir
development opportunities, and more than
700 feet of saturated hydrocarbon column."
Chaparral increased its STACK production to 16,600 boe/d during fourth
quarter 2018, up 6% compared with the
previous quarter. Full-year STACK production grew by 52% to 14,400 bbl/d
last year compared with 2017. Its 2018
total company production was 61% liquids
(36% oil and 25% natural gas liquids)
and 39% natural gas.
Calhoun says part of the company's

American Oil and Gas Reporter - May 2019

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