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The Woodford Shale: 2011 Outlook
The Woodford Shale will see a shift in capital in 2011 from the development of dry gas areas to those areas that produce a high proportion of oil and natural gas liquids. This is the continuation of a trend that has been underway for several years, and reflects the higher returns realized from wells relative to dry gas. (For background reading, check out the Oil And Gas Industry Primer.)
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Devon Energy (NYSE:DVN) spent 2010 increasing its sizable position in the Woodford Shale and now has 243,000 net acres under lease in the Cana portion of this play in western Oklahoma. The company completed 87 wells here during the year, and reported average production of 137 million cubic feet of natural gas equivalents per day in the fourth quarter of 2010.
Devon Energy has thousands of drilling locations on its acreage here and likes the higher returns from Cana wells due to the amount of condensate and other liquids that are produced along with the natural gas. The company plans to put 90% of its $4.5 billion to $4.9 billion budget into these types of plays in North America.
Cimarex Energy (NYSE:XEC) is also active in the Cana play and drilled 112 gross wells in 2010, completing 86 of these. The company reported average production during the fourth quarter of 2010 of 99.5 million cubic feet equivalent per day.
In 2011, Cimarex Energy plans less development of the Cana Woodford Shale compared to 2010, as it sees better opportunities from its properties in the Permian Basin. The company plans to drill 100 gross wells during the year and put 38% of its $1.2 billion to $1.4 billion 2011 capital budget into the Midcontinent area. The Midcontinent also includes the company's activities in the Granite Wash.
Newfield Exploration (NYSE:NFX) just announced the development of a new Woodford oil play in the Arkoma Basin in southeast Oklahoma. The company estimates that this play may be present on 15% of its total position of 172,000 net acres.
Newfield Exploration reported that four of its early wells here had average production during the first 30 days of 950 barrels of oil equivalent (BOE) per day, with 35% of the production composed of oil. The company plans to drill between 12 and 18 wells into this play in 2011.
PetroQuest (NYSE:PQ) has a prospective 45,000 net acres for the Woodford Shale. The company plans to put 34% of its 2011 capital budget here in 2011. Most of this development will be in the dry gas area of the Woodford as the company plans to grow its oil and liquids production through the development of properties in the Eagle Ford and Niobrara plays.
The Bottom Line
Some parts of the Woodford Shale will see increased development by the exploration and production industry in 2011 due to the high amount of oil and natural gas liquids in these areas. This will come at the expense of the traditional development of dry gas areas of the play. (To learn more, check out our Oil & Gas Industry Primer.)
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IN PICTURES: 9 Simple Investing Ratios You Need To Know
Devon Energy (NYSE:DVN) spent 2010 increasing its sizable position in the Woodford Shale and now has 243,000 net acres under lease in the Cana portion of this play in western Oklahoma. The company completed 87 wells here during the year, and reported average production of 137 million cubic feet of natural gas equivalents per day in the fourth quarter of 2010.
Devon Energy has thousands of drilling locations on its acreage here and likes the higher returns from Cana wells due to the amount of condensate and other liquids that are produced along with the natural gas. The company plans to put 90% of its $4.5 billion to $4.9 billion budget into these types of plays in North America.
Cimarex Energy (NYSE:XEC) is also active in the Cana play and drilled 112 gross wells in 2010, completing 86 of these. The company reported average production during the fourth quarter of 2010 of 99.5 million cubic feet equivalent per day.
Newfield Exploration (NYSE:NFX) just announced the development of a new Woodford oil play in the Arkoma Basin in southeast Oklahoma. The company estimates that this play may be present on 15% of its total position of 172,000 net acres.
Newfield Exploration reported that four of its early wells here had average production during the first 30 days of 950 barrels of oil equivalent (BOE) per day, with 35% of the production composed of oil. The company plans to drill between 12 and 18 wells into this play in 2011.
PetroQuest (NYSE:PQ) has a prospective 45,000 net acres for the Woodford Shale. The company plans to put 34% of its 2011 capital budget here in 2011. Most of this development will be in the dry gas area of the Woodford as the company plans to grow its oil and liquids production through the development of properties in the Eagle Ford and Niobrara plays.
The Bottom Line
Some parts of the Woodford Shale will see increased development by the exploration and production industry in 2011 due to the high amount of oil and natural gas liquids in these areas. This will come at the expense of the traditional development of dry gas areas of the play. (To learn more, check out our Oil & Gas Industry Primer.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Eric Fox
Eric J. Fox, CFA, is a freelance financial writer and has previous experience working in the asset management industry as an equity analyst and portfolio manager on the buy side. His favorite area to write on is the energy sector and he keeps current on the industry by reading Haynesville Shale, Permian Oil and Gas and various other blogs.
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