Exploration

Hoxbar Formation – A look the best wells in Grady County, OK

Unit - Hoxbar Play

Hoxbar StratThe SCOOP (South Central Oklahoma Oil Province), like the STACK, lies in the Anadarko Basin, adjacent to and southeast of the popular STACK play. It emerged a year or two earlier than the STACK and possesses some of the same formations, including the Hunton and Woodford. Additionally, the SCOOP is layered with the Caney, Hoxbar, and Springer formations. While the Woodford Shale is historically the most drilled strata, the Hoxbar has produced some of the best oil wells to date in Grady County over the last 5 years or so.

The Hoxbar play, known as the SoHot, representing “southern Oklahoma Hoxbar oil trend has six stacked sands. Unit Corp. drilled its first well in the play in 2013, and it has quickly become a core position for the company.

Thus far, Unit has drilled and completed horizontals in two of the zones, identifying an oily zone—Marchand—and a gassy zone—Medrano.”

There are 479 currently reporting, producing HZ wells in Grady County, according to a search of IHS data. There are 52 producing wells designated as “Hoxbar”, 4 as “Lower Hoxbar”, 10 as “Marchand” and 3 as “Medrano”, for a total of 69 wells.Hoxbar

The Hoxbar is a roughly 2,000-foot-thick, Pennsylvanian-age sequence of sand and shale intervals, according to Unit, which estimates it to contain four to six sand intervals that may be commercial. The oily Marchand sandstone is at about 11,000 feet; the gassy Medrano sandstone, 9,800 feet.

With a 4,300-foot lateral, the Marchand wells cost some $7 million and may produce 300,000 to 500,000 barrels of oil equivalent (BOE)—85% to 90% oil—Unit reports. With a similar lateral, the Medrano wells cost some $4.2 million and may produce 3.0- to 4.5 billion cubic feet of gas equivalent, 30% liquids.

 

In terms of average well performance, Woodford and Springer Shale wells lead the pack, but averages don’t tell the entire story

Hoxbar wells, and other tight sands, are known for having a high variance, so it makes sense that the max and the average don’t move one-to-one.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOP PRODUCING WELLS – GRADY COUNTY – ARE HOXBAR

Unit has been one of the most active operators in Grady County since 2013.  In 2017, the company acquired 8,300 net acres in its Hoxbar Field core in exchange for $57 million in cash and land.  Unit acquired 47 proved developed producing wells in Grady and Caddo Counties with estimated average volumes of 1,367 barrels of oil equivalent per day (boe/d).  The OCC form 1073, showed that EOG Resources was the seller, and transferred operations for 23 wells

At the time of the transaction, Brian Velie, an analyst at Capital One Securities, said the acreage’s production alone was valued at $62 million at prices of $60,000 per flowing barrel of oil; $4,000 per thousand cubic feet of gas; and $24 per flowing barrel of NGL.

The acquisition added 65 gross potential horizontal drilling locations, of which 13 were not previously defined,” Velie said in an April 4, 2017 analyst note. “Of the acquired acreage, 71% is HPB. The deal also includes a small gathering system.”

The acreage created a large overlap with Unit’s existing operations at that time and the company increased its working interest in other well locations it already operated on the acreage. Of the 47 wells acquired, Unit operated 20.

Unit’s core Hoxbar acreage position lies adjacent to the Norge Marchand Waterflood Unit. Unit’s Marchand wells have an average estimated ultimate recovery of more than 500,000 boe, the company said.

The EOG acquisition gave operational control to key areas of the Marchand zone of the Hoxbar reservoir for secondary recovery efforts, which have the potential to significantly increase existing well production. Unit anticipates that the initial secondary recovery phase will increase the reserve potential from the Marchand interval by at least 500,000 boe per well.

 

Source: IHS Production

 

GEOGRAPHICAL FOOTPRINT – Hoxbar Area

This area is located down in the western part of Grady County, mostly across four townships – 5 and 6 North, and Ranges 7 and 8 west.  Recent well completions by Unit include Schenk Trust 1-17HXL well with a unit covering Sections 17 & 20 of 6N-8W, which was completed for 2,343 boe/d, as shown on the Unit Investor Presentation made August 22nd, 2018 at the EnerCom Oil  Gas Conference.  Unit has also drilled two increased density wells in the unit, the Schenk Trust 2-17XHL AND 3-17XHL which have been online for less than 30 days, according to the presentation.

 

Looking Forward in a Complex Industry

Rising oil prices have stabilized the balance sheets of oil companies and provided more drilling dollars for development.

Significant advances continue in technology and new methods have been learned.

Wells are now being drilled more accurately, at faster rates, and with longer laterals, sometimes multiple laterals.

Wells are now being completed with more complicated fractures, including tighter clusters and shorter intervals, using higher densities of proppants.

Wells are drilled more cheaply, on a dollar per foot basis, and resources are extracted more easily, on a unit per foot basis.

Following years of innovations, the industry is better suited to expand the Hoxbar play in Southern Oklahoma. Look for more drilling of Hoxbar wells in Grady and Caddo Counties as other companies along with Unit continue to drill Hoxbar wells.

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