Tickers in this Article: XEC, CLR, QEP, DVN
The development of the Woodford Shale moved steadily forward during the second quarter of 2011, with most activity focused on areas that have a high content of liquid hydrocarbons. Operators have been busy working to delineate the extent of the play, building infrastructure to handle future production, and trying to determine the down spacing potential of acreage here. TUTORIAL: The Industry Handbook: The Oil Services Industry

Cana Woodford Delineation
Continental Resources (NYSE:CLR) is focused on the Cana area of the Woodford Shale as wells here produce a significant content of liquids along with the natural gas stream. The company has 270,000 net acres under lease in the Woodford Shale, and estimates that 33% of this leasehold is in the Cana portion of the play.

Continental Resources just reported a number of successful wells in the Cana Woodford Shale, including one well that was 25 miles south of any previous Woodford Shale activity. The company believes that this well proves up an additional 15,000 net acres held by the company.

Continental Resources is operating 13 rigs in the Cana Woodford Shale and has indicated that the play will be a significant area of focus for the company going forward. (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.)

Down Spacing Potential
Cimarex Energy (NYSE:XEC) has 120,000 net acres prospective for the Cana play and has been active here since 2007, drilling 100 net wells to date.

During the second quarter of 2011, Cimarex Energy worked on a pilot project to determine how far down the core area can be down spaced. If the company is correct that the acreage can be developed economically on 80-acre spacing, then it would yield 730 net locations for Cimarex Energy.

Infrastructure Expansion
Devon Energy (NYSE:DVN) has 243,000 net acres under lease in the Cana Woodford and is one of the most aggressive operators in developing acreage here. The company plans to drill 225 wells in 2011, compared to only 87 wells in 2010.

Devon Energy is also expanding the capacity of a natural gas processing plant that serves this area. The Cana gas processing plant was damaged by a tornado in May 2011, and is expected to be operational by the fourth quarter of 2011.

Devon Energy has allocated $125 million to increase capacity at the plant from 200 million to 350 million cubic feet per day. The extra capacity will be complete and operational in the fourth quarter of 2012.

QEP Resources (NYSE:QEP) has been involved with the Woodford Shale and has been adding acreage in the liquids area of this play. The company plans to operate three rigs in this play for the remainder of 2011.

QEP Resources has been working on perfecting the company's drilling and completion process during the second quarter of 2011, and reported an increase in the estimated ultimate recovery of Cana Woodford wells.

QEP Resources has increased the company's capital allocation to the Woodford and plans to spend 11% of its 2011 capital budget in this play, up from 7% in 2009.

The Bottom Line
The Woodford Shale doesn't get as much attention in the media as some other unconventional resource plays in the United States, but operators are rapidly increasing development due to the high liquid content of wells here. (For more on oil production and shortfalls, see Peak Oil: What To Do When The Well Runs Dry.)

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