In our industry, whenever you hear about the Sooner State, Oklahoma natural gas comes to mind.
One of the most famous Oklahomans (besides Will Rogers) is T. Boone Pickens. The man has made it his life mission to wean us off foreign oil. Like many in the oil and gas industry, he thinks it’s time for America to take advantage of the wealth of natural gas right beneath our feet.
But consistently low natural gas prices have driven operators to look for more liquids-rich plays.
Enter the South Central Oklahoma Oil Province, or “SCOOP.”
Oklahoma Natural Gas – Escaping the Pigeonhole
Throughout 2013 oil and gas leasing activity remained fairly consistent throughout the United States. The SCOOP is the sole exception to the rule.
The play is located in Grady, McClain, Garvin, Stephens and Carter Counties. It covers the Eastern portion of the Anadarko Basin.
Continental Resources undertook significant leasing activity in the SCOOP throughout the second half of 2011 and all of 2012. Over that period, Continental gained rights to over 197,000 acres. 20% of those acres are Held By Production (HBP). Amazingly, they managed to keep the play quiet.
In late 2012, Continental announced the results of its initial wells. The results look promising. The company realized rates of return between 40-55% based on $3.50 gas and $90 oil.
Sleuthing the SCOOP
Continental’s decision to explore the area has all the makings of a great oilfield discovery story.
According to an article in the January 2013 issue of World Oil Online, Continental challenged its team in the southern portion of the Woodford to get their rate of return up in the face of declining natural gas prices. As a result, the group shifted its focus to the area now called the SCOOP.
At first, the team thought the area would primarily produce the Oklahoma natural gas we’ve all come to expect in the region.
However, initial wells showed significant amounts of oil and condensate. As they continued to study, they discovered the area actually held large reserves of oil and liquids. Current rates of return are competitive with the Bakken.
The Word is Out
In 2013, several other companies began staking out positions within the SCOOP. As a result, the region saw a 35% increase in leasing activity over the previous time frame in 2012.
While Marathon, Newfield and Chesapeake were leasing in the SCOOP in the later half of 2012, they all expanded their positions in 2013. Apache and Unit also enter the play. Not to be outdone, Cimarex holds 75,000 HBP acres in the region and is beginning to drill.
So, while Continental kept things quiet as long as they could – word’s out. And if current leasing trends hold, from a pricing perspective, the sooner you can enter the play the better.
But what else would you expect from the Sooner State?
What do you think will become of the SCOOP? Will the play see major land grabs in 2014? How do you feel about its prospectivity? Please leave a comment below.