Wednesday, July 31, 2019

ConocoPhillips Provides A Project Update

On their quarterly conference call yesterday, ConocoPhillips ("COP") provided an update on their efforts in the LAMS Stack Play.  They have completed their pilot four well drilling program.  The McKowen #1 and Hebert #1 are producing and the Erwin #1 has begun flowback.  COP chose not to finish drilling the lateral in well #4 (Soterra #1) for unstated reasons.  On SONRIS it states that the pilot hole reached total depth of 13,390' which should be approximately 125' below the base of the Austin Chalk.  SONRIS states that they drilled to 12,156' and ran logs.  It does not state that they ran logs at the total depth of 13,390' which would be hard to imagine.  I assume that they ran a full suite of logs and acquired sidewall cores.  They drilled the curve to 13,349' and terminated drilling.  My speculation is that the data collected in the vertical pilot hole was not encouraging.  The Soterra #1 is across the edge of my "prospective limits" where the DLogR/TOC dramatically decreases to the south (map below).  The Mean DLogR is approximately ~1.2 in the Karnes Trough where EOG is making enormous wells. In southwest Giddings Field (Washington County) where many good wells have been completed, the Mean DLogR ranges from 1.2-1.4.

In prior posts (links below), I provided some insight on the McKowen #1 result. My potential interpretations #1 and #4 are now the likely options for the producing wells that have very high water cut.  Either the formation has very high water saturation or the large proppant frac is penetrating higher water saturations from the Austin Chalk above the target zone.  I don't have their landing zone and completions details, so it's impossible to make a firm interpretation.  Based on log calculations from hundreds of wells, I believe that the McKowen #1 and Hebert #1 are producing from higher water saturated zones above the "target zone".  Containing the frac in the bottom 150' will be the key.  That's where the best quality rock and highest TOC is located in this source rock.

Below are relevant statements from the COP earnings call:
"Lastly, we continue to evaluate our results in the Louisiana Austin Chalk play. So far, although we drilled oil from the first three wells that produced a higher water cuts and we were hoping to see. So the results to date are disappointing. Louisiana Austin Chalk is the primary target, we're also evaluating opportunities and other formations within the acreage."

"On the Austin Chalk, yes, we've tested three of the four wells that we had to test the Austin Chalk play there. And it's just as we brought those wells on the petroleum system isn't working as effectively as we hoped it would. The chalk hasn’t dewatered to the extent that they are – this required to get high enough production rates. I mean unconventional wells produce higher water cuts and other plays, I mean the Delaware Basin for example."

"So that by itself is not a disqualifier. But here the water cut that we've seen it’s been a bet over 90%. The oil rates have been about a 100 barrels a day. It's just unlikely to be enough to justify a development and that part of the play. There are targets in the Wilcox and there are targets and the Tuscaloosa Marine shale. So the acreage is not condemned by that primary target and the Austin Chalk doesn't look encouraging just now."
Matthew Fox - Chief Operating Officer

Note that COP confirmed the "stack" potential in the LAMS Stack Play!  It's mindboggling that they chose not to drill pilot holes through the TMS in all four wells.  At EOG's drilling rate in the Ironwood 37H-1, that's one more day of and valuable data.

All of the TMSers know that "tenacity" is our core skill set.  Yogi Berra might say it's "deja vu all over again".  See the list below of TMS horizontals from 2011 to the end of drilling in 2015.  Devon was the initial leader in the TMS and after they drilled 7 wells, they exited and sold to Goodrich.  70 wells were drilled through early 2015 after their exit.  A recent TMS well tested 1458 boepd.  EOG has proven that they can drill a TMS well in 19 days.  Does $7-8M DHC/CC at $57/bbl work at 1458 boepd and a 600-800 MMBO EUR?  We'll see!

We await the results from the Erwin #1 and EOG Ironwood 37H-1 in the coming weeks.

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