h, East Texas in the springtime—a vibrantgreen blanket of rolling hills laced with

oak trees, abundant wildflowerssplashed across fields, a warm blue-sky daywith a cool breeze blowing—and more than athousand feet of potential oil pay down below.It doesn’t get any better.

The East Texas Basin Woodbine sands havebeen a long-time target of conventional oilproducers, but down in Madison and sur-rounding counties, below the Angelina-Cald-well flexure, the unconforming sandstoneinterlaced with shale is significantly tighterand harder to produce than the historicallyprolific fields to the northeast. While at-tempted conventionally, much resource re-mains. In fields like Kurten and Halliday,developed with vertical wells in the 1970s and1980s, typical wells flowed 50 to 75 barrels ofoil per day, with total recovery of 37,000 bar-rels on average.

But today, modern unconventional technol-ogy is being brought to bear. Led by private in-dependents, companies are revisiting

conventional Woodbine fields near historic pro-duction and turning in initial production (IP)rates ranging from 500 to 1,500 barrels of oilequivalent (BOE) per day in certain areas. Un-conventional activity blossomed within KurtenField in Madison County, where early-moverslike PetroMax Operating Co. and WoodbineAcquisition Corp. attracted attention with1,000-barrel-a-day and higher IP rates.

Recently, operators have begun exploringdeeper into the more shale-like rock, which iscontiguous across the basin, with promising butvaried results. The Eagle Ford shale, a star pro-ductive zone in South Texas, is present here.Large independents like EOG Resources Corp.,Apache Corp. and Devon Energy Corp. havejoined the small privates that re-opened theplay, with drillbits aimed into this laminatedshale interval.

The East Texas Woodbine-Eagle Ford is, infact, three emerging unconventional resourceplays, with multiple oil-bearing targets addingto its appeal. In addition to the Woodbine sand-stone and the Eagle Ford shale, a host of oil-bearing targets exists in the Lower Cretaceousformations.

Halcón Resources Corp. is the most activeoperator in the play with six rigs on the ground,targeting two of the intervals. This young com-pany has quickly grown to a $5-billion enter-prise value. Halcón president Steve Herod saysthe resource here is a pillar of the company’sgrowth plans.

“The East Texas Woodbine and Eagle Fordare critical to what we’re doing,” he says. “Wehave nothing but high hopes.”

Crimson Exploration Inc. chief executive andpresident Allan Keel is another satisfied cus-tomer. “The economics here are very, verygood,” he says. “With the success we’ve hadlast year and so far this year, we feel this isgoing to be the cornerstone of Crimson goingforward.”

One chief executive of a small, private com-pany expressed this confident view: “This playstands to be one of the best emerging plays inthe U.S., considering the multiple oil- and gas-saturated horizons in the area. We’re looking atmultiple millions of barrels of oil that weshould be able to recover. We anticipate build-ing our company around this.”

EAST TEXAS’ WOODBINE-EAGLE FORD

At the southern edge of the historic East Texas Basin, operators arediscovering how to turn challenging geology into solid economic returns.

ARTICLE BYSTEVE TOON

PHOTOGRAPHY BYMIEKO MAHI

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The Woodbinesands dippingsouth from theEast Texas Basinand the EagleFord shaletrendingnortheastoverlap inMadison County,the epicenter ofnew drillingtargeting both ofthese zones.

Source: ZaZa Energy Corp.

Crimson’s sandsilt playsWith 85% of its total budget aimed at the

Woodbine sands in southwestern MadisonCounty and northern Grimes, you could sayCrimson Exploration is confidently puttingmost of its drillbits in one basket.

“The experience we’ve had here in the last18 months has been very positive. The recover-ies we expect to receive from these wells arerobust,” says Crimson chief executive Keel.“We think the economics in this play, whencompared to other opportunities in our portfo-lio, are superior to anything in our inventory.”

Houston-based Crimson holds 19,000 netacres in three different areas of the play, about6,000 acres each, of which more than half is aheld-by-production legacy position. Its favoriteand most active area, called Force, lies in west-ern Madison County in Madisonville-WestField, and is offset by highly successful Wood-bine Acquisition Corp. wells. Located in a fieldwith historical vertical production, Crimson hasdrilled six wells here targeting Woodbinesands, with average 30-day IP rates of 900BOE per day.

“We feel the Force acreage is completelyproven,” Keel says.

Crimson’s Force area is proving to be asweet spot for the company. The latest twowells brought online illustrate the optimism. Inearly April, Nevell-Mosley #1H flowed at1,164 BOE per day IP (1,021 barrels of oil, 77barrels of gas liquids, 392,000 cubic feet of gas)

from a 6,000-foot lateral with 22 fracturestages.

“It’s about 90% black oil,” Keel says. “In 45days it’s produced over 44,000 barrels equiva-lent; we’re very pleased with that.”

About two miles offset, Mosley B #1H, withthe same length lateral and stages, flowed 1,143BOE per day, and was holding above 1,000 dailybarrels three weeks out. At $7 million per welland an average 400,000 barrels equivalent esti-mated ultimate recovery (EUR), Keel likes the150% rate of return at current commodity prices.

“We’re confident with the wells drilled in ourForce area. Every well we’ve drilled there is inline with our type curve.”

But Keel confirms that the stratigraphy in thesands varies, and the Force sand pinches outacross a ridge moving east. The company’sChalktown area in this direction is prospectivefor a completely different Woodbine-age sandlens in the Lewisville formation. “It’s not ho-mogenous.”

One well drilled here last year encounteredmechanical problems, but showed oil.With an eye to producing wells drilled by

third-party operators north and south of theblock, Keel is not deterred. “We are comfortablewith the potential of Chalktown and plan to drilla well there this year, maybe more. We stillneed to do more work to prove Chalktown.”

Moving into Grimes County just south anddown dip, production from Crimson’s Iola-Grimes project is decidedly wet gas with con-densate. Its second well there targetingLewisville sand is producing 5.9 million cubic

Crimson Energychief executiveand presidentAllan Keel saysthe Woodbinesands are “goingto be thecornerstone ofCrimson goingforward.”Previous page,floor hands onHelmerich &Payne Rig #398drill Bumble Bee1H, targeting theEagle Ford shale,for HalcónResources Corp.in BrazosCounty, Texas.

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ZaZa Energy Corp.Halcón ResourcesEOG ResourcesBlueStoneCrimson Energy PartnersCrimson ExplorationDevonEncanaSM EnergyNavidad ResourcesWoodbine AcquisitionCorp.HalexGastar ExplorationOther

With leaseslargely blockedup by now, bothsmall and largeoperators arefinding paydirt inthe Woodbinesands, Eagle Fordshale and LowerCretaceoustrends.

Woodbine-Eagle Ford Acreage By Operator

Source: ZaZa Energy Corp., DrillingInfo

feet (MMcf) equivalent per day (4 MMcf ofgas, 310 barrels of condensate and liquids) on arestricted rate, waiting on a refrigeration unit toprocess liquids. “If we wanted to, we could pro-duce that well at 10 million a day,” he says. Atleast one more is planned this year.

Crimson well costs have trended down 34%,now at some $6.5 million on the latest twowells, due partially to declining proppant costs,but also to fewer days drilling, from 35 to 27typically.

With one rig running, Crimson plans to drillan additional six wells this year, four in Force,and more if capital comes available. The com-pany currently has $50 million in capex ear-marked for Woodbine drilling, but hopes torefinance debt, sell equity or sell other conven-tional assets to extend the program.

“We want to improve our liquidity throughone of these means because the economics areso good here,” Keel says.

Besides the Woodbine sands—and whencapital is available—Keel sees upside opportu-nity in the laminated shale formations and theLower Cretaceous zones below, namely theBuda, Georgetown and Glen Rose; he antici-pates all to be horizontal targets. With nearly500 locations identified in those three targetzones, the company projects more than 110million BOE of net resource potential on itsWoodbine acreage.

“With three zones to pursue, it’s like we have57,000 acres,” says Keel. “The Woodbine iscritical to our growth plans. With the successwe’ve had, we feel that this is the cornerstoneof Crimson going forward.”

The HawkBarely a year and a half old, Houston-based

Halcón Resources Corp. has compiled a

270,000-acre position in the East Texas Basinand high-graded two of its related plays as toppriority for capex and development, rightalongside its more mature Bakken program inimportance. The reason? Large pools of easilyaccessible reserves can be turned into cash flowquickly.

“It is a place where we could put together alarge, contiguous land position where drillingcosts are reasonable,” says Halcón’s Herod.“We can have a program here ongoing for sev-eral years. And, of course, it’s oily.”

Halcón is essentially a restart of the for-mer Petrohawk Energy Corp., an earlyshale leader preceding its sale in 2011,

and it is stocked with much of the same execu-tive and technical team. The new company dif-ferentiates between the Woodbine sands andthe East Texas Eagle Ford shale as strategicallydifferent plays, but the programs share rigs andcapital.

In southern Leon County, after testing theedges to delineate the commercial boundaries,Halcón now considers its Halliday Field in theWoodbine sand play to be substantially de-risked and proven. With some 30,000 net acresconcentrated here, the company is aiming for a40-foot thick section of the upper Woodbinesands, “the second sand below the base of theAustin chalk,” beginning at 6,200 feet depth.

“Once it’s defined, it’s proven drilling,” saysHerod. “Its economics compete with any otherplay for capital, and you can get great eco-nomics for the capital invested. Anybody wouldlike something like that in their portfolio.”

Abundant vertical well control attracted Hal-cón, which acquired its position from privatelyheld Fort Worth, Texas, companies PetromaxOperating and CH4 Energy LLC, just a monthafter forming. The field had produced 2.2 mil-

A mud engineerchecks drillingfluid at HalcónResources’Bumble Bee 1Hin Brazos County,Texas, one of theearly wells in thecompany’s ElHalcón Field.

Overleaf, acompletionscrew fromNaborsIndustrieschecksequipmentbetweenfracture-stimulationstages on HedgeHog 1H, an 8,000-foot horizontallateral well forHalcónResources inBrazos County,Texas, in theEast Texas EagleFord shale.

lion barrels of oil conventionally, about 50,000barrels per well.

“We felt it was tight enough that you couldcome back in and exploit that with horizontalwells,” says Charles Cusack, executive vicepresident of exploration for Halcón.

Here at the southern end of the East TexasWoodbine sands, he says, the rock is of lowerpermeability than those produced further north,leaving more hydrocarbons behind. “The verti-cal wells probably got about 3% to 4% recov-ery; we should be able to recover 20% to 25%with horizontal wells.”

But true to the varied nature of the Woodbinesandsilt, such rich deposits are contained withinstratigraphic traps, and are not ubiquitousacross a large geographic extent as are shaleplays.

“It’s not a resource play,” Herod says. “It’snot like the Haynesville shale or (Eagle Ford)Black Hawk Field where you have 100 milesacross. We had to drill some wells around theedges to better define it.”

And while not all the surrounding acreagewill be as productive, once defined, helikes the results. “As you get into the

heart of the field, you have a well-developedsandstone.” Pointing to a bulge in a gamma raylog, he says, “That’s the mother lode rightthere.”

First-quarter results averaged 438 BOE perday after 30 days. The company has drilled 51horizontal wells to date—14 in 2013—with 36on production. The average lateral length forwells completed year-to-date is 6,700 feet.

Halcón models Halliday Field economics on562,000 BOE EUR. “That’s more than half amillion barrels for about $6.5 million or so (perwell),” a 130% IRR for $90 oil, Herod pointsout. “That’s plenty good.” The company hasaveraged five operated rigs here in 2013 on a$390-million budget, with plans to spud up to65 operated wells.

With no expectation that every Woodbinesandstone acre in its portfolio will be equal,Halcón does anticipate finding other sweetspots across the play like Halliday. It is cur-rently conducting a 330-square-mile 3-D seis-mic shoot across southern Leon, central

Madison and northern Grimes counties to iden-tify other stratigraphic targets within its broaderacreage block.

“It’s a different kind of play down here,” ob-serves Cusack. The Woodbine sands dip deeperinto a bowl-like deposit moving south fromHalliday Field. “Each one of these plays is a lit-tle different, but we’re optimistic we’re goingto have other areas of the southern Woodbine

HalcónResources, theleader in the playby rig count,models a 60%internal rate ofreturn at $90 oilfor Eagle Fordwells in its ElHalcón Field inBrazos County,and a 130% IRRin Halliday FieldtargetingWoodbine sandsin Leon County.

HalcónResources’executive vicepresident ofexplorationCharles Cusacksays theWoodbine sandscome and goacross the play,and anticipatesthe company willfind otherdeposits as richin resource as itsHalliday Field insouthern LeonCounty.

Halliday Field (Leon County, TX)

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that will work for us.”In April, Halcón debuted El Halcón Field

(“The Hawk”), a 50,000-acre play in northernBrazos County targeting the Eagle Ford shale at9,000 feet subsurface. The Eagle Ford here is acousin to its famous South Texas neighbor, ageologically analogous deposit east of the SanMarcos arch, which divides the two.

Cusack describes the zone as a 200-foot-thick section with high oil saturation andgood porosity overlaying the Maness

shale. Unlike the sometimes fickle Woodbinesands, Halcón’s East Texas Eagle Ford shale ishomogenous like a resource play across a broadarea. “It was laid down like a blanket,” saysCusack. “It covers a large area and should beproductive over most of it.”

The wildcard, though, is the reserves. Unlikethe South Texas Eagle Ford trend, rock proper-ties here are more varied, with a higher claycontent and a mix of laminated sandstone.

“The reservoir quality of the rock is not as uni-form,” he notes. “There’s going to be some trialand error to define that. You have to work the

details to understand where the better parts are.”Herod is confident in the company’s ability

to do so, and on a wide scale, having been atechnical leader in the original Eagle Ford dis-covery. Early announced results seem to bolsterthe claim: Two producing wells completed in2013 average 1,028 BOE and 831 BOE per dayfor IP and 30-day rates, respectively, and are90% oil. These are from 6,400-foot average lat-erals with 33 frac stages. “We think we can re-peat that,” Herod says.

Currently, seven Eagle Ford wells are pro-ducing, with seven more drilling or completing.The recently drilled Bumble Bee 1H, waitingon completion at press time, will have an8,900-foot completed lateral, and is indicativeof future wells.

“We feel good about 8,000- to 9,000-foot lat-erals here,” he says. “It’s going to cost morethan the 6,500-foot wells, but that’s fewer verti-cals you have to drill to get the same laterallength and reserves. That’s the best bang for thebuck.”

These wells feature 371,000 BOE of esti-

A Texasmesquite treeframes a ClaytonWilliams EnergyInc. producingwell in theoverlappingWoodbine andEast Texas EagleFord plays in thepastoral settingof Brazos County.

thickness.Yet it’s the 150- to 250-foot section of silica-

rich, laminated shale immediately above theBuda that has attracted ZaZa’s interest. ZaZacalls it the Lower Eaglebine. “Our Lower Ea-glebine is Halcón’s El Halcón,” says ZaZachief executive Todd Brooks, clarifying the ter-minology. “And it’s very oily.”

While the sandsilt play being developedby others lies up hole, for now thatremains upside only to ZaZa. “The

sands are not continuous, although we haveshows in them. We target the organic-rich shalebecause it’s a continuous, repeatable opportu-nity with more storage capacity,” says Brooks.

Thomas Bowman, executive vice presidentof evaluation, geology and geophysics forZaZa, adds, “From all we’ve seen, the potentialhas always been in that shale, the lower part.Right on top of the Buda is where the resistivityincreases.” Tests indicate the acreage will yieldgas condensate or volatile oil, he says. “By na-ture, it’s a resource play; it has to work statisti-cally.”

In December, ZaZa drilled its first horizontalwell into the Lower Eaglebine at a verticaldepth of 11,800 feet, but lost the lateral to acasing failure. The well has since been side-tracked as a vertical and is producing fromdeeper zones. The company’s interpretation ofthe well log results using Schlumberger’sELAN analysis tool, however, indicated an esti-mated 21 billion cubic feet of gas and 29 mil-lion BOE per section in place, or 980,000 BOEEUR of recoverable reserves, based on a recov-

mated recoverable reserves, drilled for about$7.5 million each, a 60% IRR at $90 oil. Hal-cón’s Eagle Ford oil is 40 API gravity, and re-ceives a premium to the Nymex price.

Halcón expects to drill 20 wells on a $100-million budget for the remainder of 2013.“With up to 500 potential drilling locations,that’s a lot of years of drilling. We’re in devel-opment mode at this point, with multiple wellscoming off of pads.”

Seeing the potential, the company is aimingto triple its current landholdings to 150,000acres.

“This will be a core area for us,” Herod em-phasizes. “We like it, we know it, and we thinkit’s highly economic. It’s a real building blockfor us.”

Betting on EaglebineWith its origins as a small, private start-up in

the early days of the South Texas Eagle Fordshale, ZaZa Energy Corp., now a $200-millionpublic company, is laying its bets on this EastTexas play. The company was also a firstmover in acreage acquisition here, having ac-crued some 140,000 gross acres concentrated innorthwestern Walker County. ZaZa has sincepartnered with a large independent to help fi-nance development of its position.

ZaZa has its own nomenclature for its tar-geted intervals, dubbed the “Eaglebine,” whichis a combination of the Eagle Ford and Wood-bine groups and represents strata from the baseof the Austin chalk to the top of the Buda lime.This interval contains conventional formationsinterlaced with organic-rich source rock. At itsthickest, the Eaglebine can exceed 1,000 feet in

Steve Herod,HalcónResourcespresident,reports two EagleFord wells drilledin 2013 in thecompany’s ElHalcón Fieldaveraged above1,000 barrels aday at initialproduction. “Wethink we canrepeat that,” hesays. Left,Halcón’s BumbleBee 1H is at7,700 feetvertical depthand aimed at theEagle Ford shalewith a 9,000-footlateral. Below, afloor handreadies pipe inthe mouse hole.

ery factor of 18% to 20%. To accelerate development, in March, ZaZa

partnered with experienced shale-player EOGResources Inc. (disclosed via public filings, al-though ZaZa is contractually mum) in a three-phase, measured joint venture that couldpotentially carry the smaller company throughnine wells. If all options are exercised, EOGwill receive, in total, up to a 75% working in-terest in 55,000 net acres in return for $50 mil-lion in cash payments, plus carrying ZaZa’swell costs and a portion of ZaZa’s other relatedwork costs.

“The potential multiple-stage cash paymentswill allow ZaZa to continue to participate afterour sequential carry runs out without having toimmediately raise new capital. That, combinedwith the sales of select (South Texas) EagleFord assets, means we’re fully funded for quitea while,” says Brooks.

The first joint-venture phase involves $10million in cash for 20,000 net acres and athree-well commitment, and the subse-

quent two phases are at EOG’s election.Below the Eaglebine, ZaZa sees ample re-

source potential in the Lower Cretaceous for-mations including the Buda, Georgetown,Edwards, Glen Rose, as well as the Kiamichi

The East Texas Woodbine-Eagle Fordgeology is a swirl of Cretaceous rockgumbo. In a word—it’s complex.

A mini-basin situated at the foot of theEast Texas Basin, the Brazos Basin dipsbelow the southern edge of the Angelina-Caldwell flexure, bordered by the Edwards-Sligo rim to the south, the San Marcos archwestward, and the Sabine uplift going east.The underlying Buda formation defines thebowl.

It is the Cretaceous-period rock stew thatcreates confusion, both geologically and innomenclature. According to a Core Labora-tories Woodbine regional study, the sandbodies forming the Upper Cretaceous reser-voirs “are erratically distributed in the sec-tion and represent various environmentsfrom fluvial to marine,” with stratigraphicfingers interlacing the strata.

Within the basin lies an organically richbut unconforming sand and siltstone mix

above the Buda limestone and below theAustin chalk. The lower portion, known asthe Woodbine group, consists mainly ofsandstone and shale of marine origin in thisregion of the East Texas Basin, according toa regional report by Scotiabank. The EagleFord group of formations overlies the Wood-bine, and consists mainly of marine, gray todark-gray shale with fine- to medium-grained, porous to nonporous sandstonemembers. Formations include the HarrisDelta and Sub-Clarksville.

“One active area targets productive sandsat Kurten Field found in the upper part of thethick section of black marine shale of theWoodbine-Eagle Ford section, just belowthe Austin chalk,” says Tim Pish, author ofthe Scotiabank report. The sandstone intervalhere is some 800 feet thick.

Woodbine Acquisition, led by a team offormer Encore Acquisition executives,turned heads with its Pavelock #1H that

GEOLOGICAL STEW

Lower Eaglebine

Woodbine Sand/Silt Play

Lower Cretaceous

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Datum Base Austin Chalk

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Above top, ZaZaEnergy Corp.chief executiveTodd Brooks isfocusingcompanyresources on theLower Eaglebineplay in WalkerCounty. “TheEaglebine is theasset from whichwe will createour productionbase and growthis company.”Above, ThomasBowman, ZaZaexecutive vicepresident ofevaluation,geology andgeophysics, says,“The potentialhas always beenin that shale, thelower part.”

ZaZa Energydefines the sand-silt zonebeginning at thebase of theAustin chalk,which trends to alaminated shaleabove the Budalimestone, as theEaglebine. Belowthat, many havetermed the LowerCretaceousformations downto the Glen Rosestrata as theBuda-Rose.

and Paluxy shales. These form a column some1,500 feet thick—the “Buda-Rose,” per thecompany’s lingo.

The company’s first well through the zone, at13,500 feet total depth, was drilling and to flowback before publication. “It’s stacked pay andcommingled zones in a vertical well,” saysBrooks. “I’m excited about the prospectivity ofthe Buda-Rose.”

At the heart of the play, ZaZa also holds upto a 100% working interest in approximately20,000 additional net acres surrounding its twoexisting operated wells. Considering the combi-nation of ZaZa’s 100% acreage position withits partnerships, including a 25% interest held

by Fort Worth-based Range Resources Corp. inselect acreage, ZaZa now books approximately69,000 net acres in the play and growing.

“The Eaglebine is the asset from which wewill create our production base and grow thiscompany,” Brooks says.

Decision pointCalgary-based Encana Corp., with a mission

to transform its production mix via organicallygrown oil opportunities, has its drillbits in anumber of exploratory plays in the U.S., includ-ing the Eaglebine in Robertson County, Texas.But the company is taking a cautiously opti-mistic approach, and has yet to commit funds to

the program in second-half 2013 as it evaluatespractices and results.

“We think we have some level of inventory,”says Jeff Wojahn, Encana executive vice presi-dent and president of its USA division, “but wedon’t know how good it is relative to somethingthe company is going to pursue. We’re testingthat right now.”

Encana’s position encompasses 124,000 netacres, all held by production from itslegacy Deep Bossier and Cotton Valley

gas play in Robertson County. In 2012, thecompany drilled three wells into the shallowersandsilt portion of the Woodbine, averaging200 BOE per day after 30 days. Since, it hasturned its efforts to the deeper laminated shale,analogous to Halcón’s Eagle Ford drilling, withfive more wells on production and two com-pleting. Results have trended upward, thoughnot yet to the levels seen by neighbors south inBrazos County targeting the same zone.

“We’ll look at a strategy of pursuing Wood-

topped 1,800 BOE at IP.The lower Woodbine section consists of

more shale, laminated with sand and clay,and is represented by formation names suchas the Dexter shale, the Pepper shale and theManess shale. It is this deeper, organicallyrich and more consistent interval that is re-cently attracting operators.

Some operators reference these lowerstrata above the Buda as the Eagle Ford, acontinuation of the South Texas shale, orlower Eaglebine, illustrating the commingledand undifferentiated nature of the Eagle Fordand Woodbine groups within the basin.

A 2011 American Association ofPetroleum Geologists study, “RegionalStratigraphic and Rock Characteristics of theEagle Ford Shale,” by Tucker Hentz andStephen Ruppel, describes this region wherethe Eagle Ford transitions into the Woodbinesands: The lower Eagle Ford shale interval“continues from the northeast flank of the(San Marcos) arch into the southwest EastTexas Basin, where the sandstone-richWoodbine group occurs between Eagle Fordand Maness shale. With facies pinch-out ofthe Woodbine complex and its equivalentPepper shale on the basin’s southwest flank,however, the Eagle Ford mudrock lies di-rectly above the Maness.”

Thomas Bowman, executive vice presi-dent of evaluation, geology and geophysicsfor ZaZa Energy Corp., says the Eaglebine isa consistent, thick section between theSabine uplift and San Marcos arch. “We’relooking at a section that is more than 450feet thick. Compare that with the thickestSouth Texas Eagle Ford at less than 300feet.”

Dallas-based Weber Energy first targetedthis interval, including drilling the Weber-Lewis 1H with a 30-day IP of 645 BOE perday, and subsequently sold its position toHalcón.

Regardless of varied geology and nomen-clature, one thing is certain: These rockscontain ample oil.

HalcónResources’Catfishprocessing plant,underconstruction inMadison County,Texas, willhandleassociated gasliquids from thecompany’sWoodbine sandsand Eagle Fordshale production.

bine sands, but the real prize for Encana is theLower Laminate,” says Wojahn. “Our land baseappears to be in the thick of the play, but wedon’t yet know whether the thickest part of theshale corresponds to the sweet spot of the play.”

For now, the company has sidelined activitytargeting the sand play and is focusing on thelaminate shale. Encana estimates resource po-tential of 25- to 35 million BOE per section inthe Lower Laminate zone, double what it hasidentified on its developing Tuscaloosa Marineshale project in Louisiana.

“That’s a lot,” he says. “It’s a very thick,large resource play with an estimated 8.6 bil-lion barrels of oil in place on Encana’s land po-sition.”

The latest two wells, Loraine McMurrey 1Hand 2H, drilled in the first quarter with 8,300-and 6,500-foot laterals, produced 483 and 387BOE per day (80% oil) on 30-day rates, for anEUR of up to 426,000 BOE in the Lower Lami-nate. Wojahn believes he can improve that, butthe clock is ticking.

“We’re still working on unlocking the com-pletion technology,” he says. “We’ve drilledvery long laterals with a high number of stagesin the Loraine McMurrey wells, and we’re try-ing to push that even further to improve theeconomics and demonstrate a higher level ofcommerciality.”

Encana sets a minimum bar of 20% returnsbefore commercializing a project, and “we’renot there yet,” he admits. The latest wells aver-aged $7.5 million, and Wojahn would like tosee results closer to 550 to 600 barrels per day.“We haven’t yet drilled wells that would becompetitive in Encana’s portfolio.”

The subsequent Weaver 1H and 2H flowedbetween 400 and 500 BOE per day in their firstseven days online, and two more wells werequeued up during the second quarter. Afterthose, Encana will pause to evaluate the pro-gram—with 1,150 identified locations—on aportfolio-wide basis.

A vertical twistWhile surrounding operators have recently

targeted the Upper Cretaceous sand and shalezones, Navidad Resources LLC settled intoeastern Madison and western Houston countiesin 2009 with a bent toward the Lower Creta-ceous. And though the intent was to drill theBuda horizontally, it quickly discovered evenmore productive zones below.

“We originally looked at this play just forhorizontal potential, but realized we had somuch stacked pay that the horizontals weren’tthe best way to get at that reserve base,” saysHarold McGowen, Navidad president and chiefexecutive.

Instead, the Tyler, Texas-based Navidadwent vertical after having drilled three earlyhorizontal wells, and hasn’t looked back. Todaythe EnCap Investments-backed company hassome 50 vertical commingled wells producing5,700 BOE per day.

That productive stacked-pay column reaches1,400 feet below the top of Buda, at drillingdepths of 8,500 to 12,400 feet. In addition toBuda, pay zones include the Georgetown, Ki-amichi, Edwards and Glen Rose formations.Like ZaZa, Navidad calls it the Buda-Rose, andlikens it to the Wolfberry play in the PermianBasin.

Before it could kick off a full-fledged drillingprogram, however, Navidad had to petition theTexas Railroad Commission for a Rule 10 Ex-ception to allow commingling production. Thiswas approved, opening the Lower Cretaceousvertical play to all operators.

Today, Navidad shares 100,000 gross acres(84,000 net) evenly split with partner BurkRoyalty, stretching 30 miles east of Madis-onville. Each company is running one operatedrig, and they are on pace to spud 30 wells thisyear, with seven down already. One recent wellIP’d at more than 1,000 BOE per day—from avertical wellbore—and “we think this could bea million-BOE well,” says McGowen.

About 20% are “star performers,” he says,but typical wells flow from 400 to 600 barrelsIP, with EURs of 200,000 barrels equivalentand greater, 70% oil and liquids. “Somethingabove 300 barrels a day is good economics.”Boomer wells return greater than 100% eco-nomics, while average wells return 50%.

Well costs today average $3 million, but hesees that coming down to as low as $2 millionwith pad development. Already, the companyhas knocked $1.5 million off of costs, and witha counterintuitive method.

“We studied rock mechanics and theway the fracture stimulation wasworking, and determined we

could do fewer stages.” Navidad stimulatesthree stages in the Glen Rose, Edwards andBuda/Georgetown. “We’ve cut our frac cost inhalf over the last year, and have been able toget the same results or better with less volume.”

McGowen calculates he can get the sameamount of pay exposed for the same dollars-per-foot with four vertical wells as with onehorizontal, and with less mechanical risk down-hole. Horizontals also inevitably leave behindbypassed pay zones. “At the end of the day, theeconomics may be about the same.”

But Navidad is not unaware of the uphole up-side in the Woodbine/Eaglebine. “We haveshows in all our wells in that 200-foot Dextershale interval above the Buda, what some peo-ple call the Lower Eaglebine. We haven’t beenable to fully evaluate that, but it is an intervalwe’re excited about—there’s just not enoughbullets to hit everything.”

He estimates some 60- to 120 million BOEof recoverable hydrocarbons from a dozen in-tervals.

Navidad and Burk have their entire block onthe market, promoting its 500 vertical locationsat 160-acre spacing, along with the tantalizinguntapped horizontal play. “That will be for thenext guy,” says McGowen. !

Above top, JeffWojahn, EncanaCorp. executivevice presidentand president ofits U.S.A.division,estimates thecompany has 8.6billion barrels ofoil in place on itsRobertsonCounty, Texas,acreage. Above,in easternMadison andwestern Houstoncounties, Texas,NavidadResources LLCpresident andchief executiveHarold McGowentook a differenttack with greatsuccess, drillingvertical wellsinto the Buda-Rose series inthe LowerCretaceous.

Excerpted from

June 2013Copyright©Hart EnergyPublishing LLP 1616 S. Voss Rd.Suite 1000Houston, TX 77057(713) 260-6400