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Chesapeake Energy CHK - Granite Wash (western Oklahoma and Texas Panhandle): Chesapeake is the
largest leasehold owner and producer and the most active driller with approximately 200,000 net acres, an increase of 5,000
net acres from the 2010 first quarter, in the unconventional liquids-rich Granite Wash plays in the Anadarko Basin, which
include the Oklahoma Colony and the Texas Panhandle Granite Wash plays. On its Granite Wash leasehold, Chesapeake estimates
it has approximately 200 million barrels of oil equivalent (mmboe) (1.2 tcfe) of proved reserves (based on the 10-year average
NYMEX strip prices at June 30, 2010) and 900 mmboe (5.4 tcfe) of risked unproved resources. During
the 2010 second quarter, Chesapeake’s average daily net production of 260 mmcfe (43 thousand barrels of oil equivalent
(mboe)) in the Greater Granite Wash play increased approximately 5% over the 2010 first quarter and 80% over the 2009 second
quarter. Chesapeake anticipates operating an average of approximately 12 rigs in the Granite Wash in 2010 to drill approximately
75 net wells. Due in large part to the play’s high oil and natural gas liquids content, the Granite Wash is currently
Chesapeake’s highest rate-of-return play and serves as an example of how the company is implementing a transition to
increased drilling activity and production to liquids-rich plays. Chesapeake increased its drilling activity in the
Granite Wash from an average of eight operated rigs in 2009 to 14 operated rigs currently and an average of 16 operated rigs
projected for 2011. Three notable recent wells completed by Chesapeake in the Colony Granite
Wash are as follows: - The James 1-33H in Washita County, OK achieved a peak 24-hour rate
of 10.0 mmcf and 2,490 bbls per day, or 24.9 mmcfe per day;
- The Huls USA 1-13H in Washita County,
OK achieved a peak 24-hour rate of 13.3 mmcf and 1,780 bbls per day, or 24.0 mmcfe per day; and
- The
Gwendolyn 2-22H in Washita County, OK achieved a peak 24-hour rate of 8.0 mmcf and 1,980 bbls per day, or 19.9 mmcfe per day.
Three notable recent wells completed by Chesapeake in the Texas Panhandle Granite Wash
are as follows: - The Ruby Lee 104H in Wheeler County, TX achieved a peak 24-hour rate of
25.3 mmcf and 2,920 bbls per day, or 42.8 mmcfe per day;
- The Dowell 1-31H in Roger Mills County,
OK achieved a peak 24-hour rate of 16.2 mmcf and 2,440 bbls per day, or 30.6 mmcfe per day; and
- The
Zybach 2010H in Wheeler County, TX achieved a peak 24-hour rate of 8.0 mmcf and 1,270 bbls per day, or 15.6 mmcfe per day.
July 2011 Update - Granite Wash, discovered by Chesapeake in 2007. Current gross operated production
is 420 million cubic feet of gas per day, the most by far in the play.
Apache Corp APA - Apache Corporation (NYSE, Nasdaq: APA) today reported that the first two horizontal wells to target the Hogshooter segment
of the Granite Wash play in the Anadarko Basin each commenced production at rates exceeding
2,000 barrels of oil per day. The Hogshooter wash is shallower,
younger and more oil-prone than previous Granite Wash targets in western Oklahoma and the
Texas Panhandle. The two wells were drilled more than 15 miles apart in Beckham
County, Okla., near the east/west axis of the Granite Wash play. The distance between the wells points to meaningful
potential in the Hogshooter segment across a broad area. Apache controls 200,000 gross acres in the Granite Wash play and
leased nearly 30,000 net acres in 2010. The Edler #1-5, located
in Section 5 of Township 11N-20 W of Beckham County, commenced production at a daily rate
of 2,050 barrels of oil and 3.7 million cubic feet (MMcf) of gas. The well was drilled to a vertical depth of approximately
11,360 feet with a 4,360-foot horizontal section before it was completed in eight stages. Apache owns an 82-percent interest
in the well. The Thetford #4-23, located in Section 23 of Township
11N-23W of Beckham County, initially produced 2,100 barrels of oil and 3.2 MMcf of gas per
day. It was drilled to a vertical depth of approximately 10,900 feet with a 4,280-foot horizontal section and then completed
in nine stages. Apache owns a 56-percent interest in the well. After
almost two months on production, each of the wells is averaging approximately 700 barrels of oil and 3.5 MMcf of gas per day. 2011 Update - We operated 9 rigs during the quarter and drilled 18 wells, including 7 Granite Wash,
3 Cherokee, 2 Hogshooter, 2 exploratory wells in the Bivins Ranch. For the year, the region is trying to complete 34 Granite Wash, 14 Cherokee, 11 Hogshooter, 8 Cleveland and one Marmaton well. The region's transformation from vertical
to horizontal drilling has evolved over the last 2 years and now the region is targeting the liquids-focused objectives. Since
the beginning of 2010, central gas production has increased 11% and oil production has grown over 200%. Acquisition
of a 240-square mile 3D survey is underway now across our Bivins Ranch new ventures play, while we had a 75% interest in 126,000
gross acres. And we are already seeing positive well results. Our first well tested over 700 barrels of oil per day from 233
in the canyon wash pay. Two additional wells
are presently drilling and we expect to be running 2 drilling rigs through the end of the year. In 2012, we expect to drill
a minimum of 6 wells on the Bivins Ranch acreage.
Devon Energy DVN - Devon Energy (DVN) Granite Wash Field - Devon brought 10 operated Granite Wash wells online in the third quarter. Initial
production from these wells averaged 1,250 barrels of oil-equivalent per day, including 180 barrels of oil and 405 barrels
of natural gas liquids per day. The company has an average working interest of 86 percent in these wells.
Range Resources RRC - During the second quarter, the Midcontinent Division focused on the Texas Panhandle Granite Wash and the northern Oklahoma
shallow oil plays. Two vertical Granite Wash wells commenced sales during the quarter at combined rates of 4.4 (3.5 net) Mmcfe
per day. One additional well is completing with three more scheduled in the play for 2010. In the northern Oklahoma shallow
oil play, one horizontal well was placed on production at a rate of 295 (236 net) BOE per day. This well reached only one-half
of its projected lateral length, yet has responded with more than 50% of the production volumes associated with the first
horizontal test. A second well is currently completing, with three additional wells planned for the remainder of the year.
Linn Energy LINE - LINN Energy LINE Granite Wash Update - Granite Wash Activity Update - LINN continued its active drilling
program in the Granite Wash, where it drilled nine operated wells during the third quarter. LINN now has 29 operated horizontal
wells producing and nine additional operated wells drilling, completing or awaiting completion. In addition, the Company owns
working interest in 25 non-operated horizontal producing wells with three additional non-operated wells in progress. The Company's
net production from the horizontal Granite Wash program during the third quarter averaged approximately 64 MMcfe/d, up from
51 MMcfe/d during the second quarter 2011. LINN will continue to optimize its Granite Wash horizontal program by systematically
drilling and completing multiple wells in a section at the same time. This technique minimizes the impact of offset completion
activity on producing wells. LINN believes this method will enable the Company to capitalize on operating efficiencies and
reduce both drilling and completion costs. On three occasions to date, LINN successfully drilled two wells from a single
pad utilizing the pad-drilling concept, which will be a critical component of the company's development plan moving forward.
With several horizontal targets in some locations, LINN may eventually have as many as six to nine horizontal wells from a
single drilling pad. LINN also developed a simultaneous-operations process that allows the company to safely drill on a pad
with an existing producing well without shutting in current production. In addition to beginning development in new
areas, LINN has drilled five different horizontal intervals in the Granite Wash (Carr, Britt, Granite Wash "A",
Granite Wash "F" and the Atoka) and plans to test several more intervals. The Company expects to refine and increase
its inventory as wells and intervals from these new areas are tested. "With results from the Granite Wash program
delivering an aggregate return of more than 100 percent over the past year, our enthusiasm about the potential of the play
continues to grow," said Arden L. Walker, Executive Vice President and Chief Operating Officer. LINN's companywide
development program continues to meet expectations. However, financial results were impacted by lower commodity prices and
higher lease operating expenses than forecast in third-quarter guidance. To alleviate oil handling constraints in the Granite
Wash during the quarter, LINN utilized temporary trucking services and storage facilities to ensure delivery of its oil production
to market.
Forest Oil FST - Forest Oil (FST) discusses Texas Panhandle - Granite Wash Play
Forest holds approximately 172,000 gross acres (103,000 net) in the Texas Panhandle.
The area provides horizontal drilling opportunities targeting multiple liquids-rich Granite Wash intervals as well as other
multi-pay objectives, including uphole oil zones. Since the beginning of the third quarter, Forest completed seven
horizontal Granite Wash wells (two wells in Hemphill County and five wells in Wheeler County) that had average 24-hour initial
production rates of 15 MMcfe/d, including a liquids component of approximately 45% of total equivalent production, or over
1,100 Bbls/d of liquids. One of the first wells targeting the Granite Wash "C" interval tested a 24-hour initial
production rate of 31 MMcfe/d, including a liquids component of approximately 40% of total equivalent production, or over
2,000 Bbls/d of liquids. Two new oil zones, the Missourian Wash (Hogshooter) and the Cleveland, were tested during
the later stages of the third quarter. The Missourian Wash well had a 24-hour initial production rate of 2,803 Bbls/d of oil,
436 Bbls/d of natural gas liquids, and 4 MMcf/d of natural gas while the Cleveland well had a 24-hour initial production rate
of 654 Bbls/d of oil. The results from these two new wells further open oil drilling opportunities across the Texas Panhandle.
In the Missourian Wash, Forest has initially identified approximately 30 follow-up locations with additional acreage being
reviewed for potential. In the Cleveland, Forest has initially identified approximately 90 follow-up locations with additional
acreage being reviewed for potential. During the second half of 2011, the Company intends to test shallow oil intervals
on the northern extent of its acreage position, in addition to Granite Wash drilling in Wheeler and Hemphill counties.
SM Energy SM - Mid-Continent Region - SM Energy operated one (1) drilling rig in its Granite Wash program during much
of the second quarter of 2011, focusing on the liquids rich wash intervals. During the second quarter, SM Energy completed
a Cottage Grove well, the Ruth 4-60 (SM 44% WI) in Wheeler County, Texas, which had a 7-day average initial production of
approximately 1,378 BOE/d, of which 82% was oil. The Company plans to continue a one (1) to two (2) drilling rig program for
the remainder of the year on its Granite Wash acreage, all of which is held by production.
Penn Virginia PVA - Penn Virginia (PVA) Granite Wash – ( Chesapeake
Energy CHK Partner ) - During the second quarter of 2011, seven (2.9 net) wells were drilled in the Mid-Continent, including
four (1.1 net) successful non-operated wells and one (0.6 net) successful operated Granite Wash well in the South Clinton
Field in Washita County, OK, one (0.1 net) successful non-operated Woodford Shale well in Pittsburg County, OK and, as previously
disclosed, one (1.0 net) unsuccessful exploratory vertical well in Roberts County, TX. The initial production results experienced
in many recently drilled and completed Granite Wash wells have been less than many of the initial wells drilled in the play.
This is primarily the result of a communication issue between wells related to down-spacing and fracturing, which has led
to downward adjustments to the type curve and the forecasted production. This issue, together with reduced non-operated drilling
activity, has led us to reduce estimated full-year 2011 production from the Granite Wash by approximately 2.7 Bcfe. Even with
the reduction of the initial production rates, the economics of the typical well still generate an attractive rate of return.
November 2011 Update - During the third quarter of 2011, three (1.1 net) non-operated Granite Wash wells were drilled in the Mid-Continent, of
which PVA went non-consent on the completion of one (0.05 net) well. Our full-year 2011 guidance includes up to 20 (8.7 net)
wells, with up to four (1.2 net) wells to be drilled during the fourth quarter of 2011.
Cimarex Energy XEC - Cimarex Energy (XEC) Granite Wash Update - Other first-quarter 2011 Mid-Continent drilling included 5 gross (2.8 net) Granite
Wash wells. Recent notable 30-day average production from these wells include the George 17-5H (61% working interest) at 8.6
MMcfe/d, George 17-6H (61% working interest) at 8.0 MMcfe/d and the Kephart 1-4H (91% working interest) at 6.5 MMcfe/d.
Newfield Exploration NFX - Granite Wash - Newfield Exploration (NFX) production in the Granite Wash play located in the Texas
Panhandle is approximately 170 MMcfe/d gross (120 MMcfe/d net). The Company is currently running three operated rigs
in the Granite Wash with its activities primarily located in Wheeler County, Texas. To date,
the Company has completed 57 wells in the Texas Panhandle portion of the play with 24-hour
gross initial production averaging approximately 15 MMcfe/d. Newfield's average working interest in the play is approximately
80%.
Plains Exploration & Production PXP - Plains Exploration PXP Granite Wash Update - In the Texas Panhandle
asset area, PXP has 5 drilling rigs operating in the Granite Wash trend and expects to continue this level of activity
through 2011. Second-quarter daily sales volumes averaged approximately 13,620 BOE per day net to PXP, or 52% higher than
first-quarter 2011 and 139% higher than the second-quarter 2010. Average daily sales volumes are expected to increase to approximately
17,000 BOE net per day by year-end 2011. During 2010 and early 2011, PXP built 15 production handling facilities and related
infrastructure in order to support the rapid growth in sales volumes that PXP is now reporting.
Unit Corp UNT - Unit Corp (UNT) Granite Wash Update - In the Granite Wash (GW) play located in the Texas Panhandle, Unit had first sales
on five horizontal wells during the third quarter. Unit’s average working interest in these wells is 79%. Of the five
new wells, one well was completed in the GW “A”, three in the GW “B”, and one in the GW “C1”
zone. The average 30-day rate for these five wells was 7.2 MMcfe per day. For the first nine months of 2011, Unit had first
sales on a total of 14 new GW horizontal wells with an average 30-day production rate of 6.5 MMcfe per day consisting of 15%
oil, 36% NGLs and 49% natural gas. The average ultimate recovery for a GW horizontal well is estimated at 4.1 Bcfe with an
average cost per well of $5.5 million. Unit anticipates operating three to four Unit drilling rigs in the Granite Wash during
the remainder of 2011, which should result in a total of 19 operated GW wells during the year at a projected net cost of $85
million.
Cabot Oil & Gas (COG) - Cabot Oil & Gas is drilling just north of the Granite Wash in Beaver County, OK. This area is called the Marmaton
Shale - Last quarter Cabot announced its initial success in the Marmaton Shale. Since then, Cabot has participated as a non-operator
in seven Marmaton wells in Beaver County, Oklahoma. The Company's working interest varies
from two to 37.5 percent in the non-operated wells. Thus far, the best performing wells have experienced peak 24-hour rates
of 1,338, 792 and 589 Boepd respectively, with one of these most recent wells having a 10-day average of 1,056 Boepd. Overall
the wells consistently were drilled and completed for less than $3 million per well. "Clearly,
this productivity encourages us to allocate capital here for our 2012 plans," said Dinges. "Presently, we are moving
an operated rig to the area in anticipation of having one rig there for 2012, in addition to one in the Eagle Ford
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