The exploration and production industry is accelerating the development of various Mississippian horizontal plays in Oklahoma and Kansas, as it seeks to fulfill the popular goal of increasing production composed of crude oil and natural gas liquids.
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The Players
One company making a huge bet, here, is SandRidge Energy (NYSE:SD), which has 800,000 net acres under lease prospective for this resource play. The company has also leased up 700,000 additional acres, and is targeting additional Mississippian plays. (For related reading, see What Determines Oil Prices?)

SandRidge drilled 47 wells across Kansas and Oklahoma, during the third quarter of 2011, increasing the company's total operated well count to 108 for the year. The company claims to have drilled nearly half of all the industry's horizontal wells targeting the Mississippian.

The company is operating 20 rigs to develop its average, and plans to increase that to an average of 26 in 2012. The company also plans to shift some capital away from its operations in the Permian Basin, and has allocated 57% of its $1.8 billion capital budget to the Mississippian.

Range Resources (NYSE:RRC) has steadily increased the company's exposure to this play during 2011, moving from 15,000 net acres, at the beginning of the year, to 105,000 net acres as of October 2011.

The company is currently focused on its properties in northern Oklahoma, where it estimates that the formation produces mostly oil and natural gas liquids.

Range Resources favors this development because the economics of wells, here, are superior to many other onshore resource plays, including some in the Permian Basin that are being targeted by competitors.

It has drilled and completed eight horizontal wells, to date, in northern Oklahoma, and estimates that these wells will have an estimated ultimate recovery (EUR) of 485,000 barrels of oil equivalent (BOE), each. The company estimates minimum returns of 60% from Mississippian wells. (Find out how to take advantage of this market without having to open a futures account. For more, see A Guide To Investing In Oil Markets.)

Other Operators
Devon Energy (NYSE:DVN) is working in the Mississippian along with several other exploratory plays in the company's new venture group. Devon Energy has approximately 210,000 net acres under lease, and plans to drill between 12 -15 wells in 2011.

PetroQuest Energy (NYSE:PQ) is at a much earlier stage of development of the Mississippian, and has leased up 28,000 net acres in the play. The company plans to start drilling its first operated well by the end of 2011.

Another early stage player is Unit Corporation (NYSE:UNT), which is focused on the Mississippian in southern Kansas. The company has 45,000 net acres prospective for this play, and plans to drill the first well in the first quarter of 2012.

The Bottom Line
The industry seems to find oil and natural gas just about everywhere in the onshore United States, contradicting the conventional wisdom that permeates the market regarding the mature nature of domestic oil and gas assets. Whether these discoveries will be able to make a difference in a global market is the real issue that investors should consider.

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At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.



Tickers in this Article: SD, RRC, PQ, UNT, DVN

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