SM Energy gave an update to their Granite Wash operations during their 2Q2010 earnings call and press release. They said the focus will be the Mayfield area of Beckham County, Oklahoma. They will operate 2 rigs in the play on their 34,000 net acre position. Fortunately for SM Energy, all the acres are held by production affording them flexibility in their drilling program.
Below are their 2010 drilling permits. They will focus on the Marmaton formation instead of their initial test of the Skinner formation, which contained great amounts of water.
This area is just across the border from the high rate, high NGL wells everyone is talking about (see the last blog on the Linn 60.2 Mmcfe/d Black well). The SM Energy McEntire 2-27H well targeted the Marmaton formation and had a 7 day rate of 14 Mmcfe/d, not including NGL volumes.
Operators are drawn to this area in part due to the high IPs and high NGL content. Although there is a serious drop in NGL prices currently, they still improve economics and greatly speed up the payout. For example, the Linn Black well has an estimated payout of 2-3 months.
Check back early and often for more Granite Wash blogs and the Granite Wash Unconventional Update for extra news and analysis.
Justin Birmingham
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