Exploration & Production | Drilling / Well Results

Energen Q2 Wolfcamp and Wolfberry Drilling Update

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Midland Basin

First Operated Wolfcamp Well in Midland Basin Generates Strong Results

Energen reported today in a separate announcement that its first operated Wolfcamp well in the Midland Basin produced at a peak 24-hour initial rate (3-stream) of 861 boepd (60% oil, 23% NGL, 17% gas) and has a 20-day peak average rate (3-stream) of 709 boepd (65% oil, 20% NGL, 15% gas). Drilled in the upper Wolfcamp shale to a lateral length of 4,250 feet in Glasscock County, Energen’s Lavaca 38 #101H initial rates are comparable to those of similar wells operated by others in the area.

“Based on the result of this well and the results of others in the Basin, it appears that multiple benches of the Wolfcamp shale will be productive and are candidates for future pad drilling, which will only make the economics stronger,” said Energen Chief Executive Officer James McManus. The company estimates that, based on 80-acre spacing and 4,400-foot lateral lengths, success in the three benches of the Wolfcamp would translate into some 2,000 potential drilling locations (unrisked) on its approximately 70,000 net acres in the play.

In the second half of 2013, Energen plans to add a horizontal rig in the Midland Basin and increase the number of wells drilled this year from 6 gross (6 net) to 9 gross (9 net). The company also expects to drill progressively longer lateral lengths – up to 7,500 feet. Energen’s second Glasscock County well is currently being completed, and the vertical section of a third well is being drilled.

Vertical Wolfberry EURs Raised

Energen Resources’ vertical Wolfberry wells continued to generate strong results in the second quarter. Sixty-seven gross (62 net) wells tested at an average peak 24-hour initial production rate (2-stream) of 114 boepd (78% oil). The peak 30-day average rate (2-stream) was 96 boepd (78% oil).

These rates are above the company’s average Wolfberry type curve primarily due to continued performance enhancement from slick water stimulations in the southern half of the Midland Basin and to contributions from deeper formations in the northern half of the basin. In the north, by adding approximately 500 feet to total depth, Energen is now drilling below the Strawn into the Mississippian to include the Atoka, Barnett, and Mississippi Lime in its completions. In addition to enhancing current vertical production, the deeper wells are holding these zones for potential horizontal drilling in the future.

Based on an analysis of well performance, Energen believes that the improvement in results supports an increase in the estimated ultimate recovery (EUR) per well from an average of 165,000 BOE to 190,000 BOE. The new average drill and complete cost is $2.5 million, and the estimated pre-tax rate of return has increased to 31 percent at commodity prices of $100 per barrel oil and $4 per Mcf gas.

Energen has drilled 94 gross (85 net) Wolfberry wells in the first six months of the year and plans to drill another 42 gross (39 net) wells by year end. This reflects a reduction of 42 net wells from prior drilling plans as the company redeploys capital to accelerate testing of the horizontal Wolfcamp potential on its Midland Basin acreage. Energen estimates that its 27,000 net undeveloped Wolfberry acres in the Midland Basin support 670 net drilling locations on 40-acre spacing.

Delaware Basin

Wolfcamp Wells in Delaware Basin Show Potential

Energen reported today in a separate announcement that three horizontal Wolfcamp wells it drilled in the Delaware Basin have generated strong early rates. The E.J. Brady 56-1 #1H was drilled in the upper Wolfcamp to a lateral length of 3,800 feet in Reeves County. It produced at a peak 24-hour initial rate (3-stream) of 1,798 boepd (27% oil, 29% NGL, 44% gas) and had a peak 20-day average rate (3-stream) of 1,585 boepd (27% oil, 29% NGL, 44% gas).

The University 39-17 #1H and University 28-21 #1H wells were drilled in Ward and Winkler counties in the eastern side of the Delaware Basin. They both tested the upper Wolfcamp and had lateral lengths of 4,000 feet and 4,200 feet, respectively. The 39-17 #1H produced at a peak 24-hour initial rate (3-stream) of 1,187 boepd (61% oil, 18% NGL, 21% gas) and had a peak 30-day average rate (3-stream) of 950 boepd (60% oil, 18% NGL, 22% gas); the 28-21 #1H produced at a peak 24-hour initial rate (3-stream) of 969 boepd (74% oil, 14% NGL, 12% gas) and had a peak 30-day average rate (3-stream) of 652 boepd (74% oil, 14% NGL, 12% gas).

“We are pleased with our early Wolfcamp results in the Delaware Basin, but more work needs to be done to fully understand the complexities of this thick shale formation,” McManus said. With approximately 114,000 net acres in the Texas Delaware Basin estimated to have Wolfcamp potential, Energen’s potential (unrisked) drilling inventory could reach into the thousands (based on 80-acre spacing and 4,400-foot lateral lengths) if the play is successful in one or more benches of the shale on a large-scale basis.

Energen has added two more operated Delaware Basin Wolfcamp wells to its exploratory drilling schedule for 2013 and has converted a second Wolfbone well to a Wolfcamp well. This brings the total number of operated Wolfcamp wells in the company’s 2013 exploration program in the Delaware Basin to 10 gross (10 net). Three wells are currently drilling.

3rd Bone Spring Development Wells Continue Solid Performance

In the company’s horizontal 3rd Bone Spring program in the Delaware Basin, Energen Resources tested 10 gross (10 net) wells in the second quarter of 2013 that had an average 24-hour peak rate (2-stream) of 1,035 boepd (70% oil). The 30-day average production rate (2-stream) of 7 gross (7 net) wells tested was 695 boepd (68% oil).

On the east side of the Pecos River, the company’s core 3rd Bone Spring holdings total approximately 30,000 net acres, of which 7,500 remain undeveloped. Energen Resources estimates that it has 46 potential locations remaining to be drilled on 160-acre spacing in this core area.

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