Energen (EGN) issued an operational update on the Third Bone Spring play in the Permian Basin. The company has 68,000 net acres prospective for this formation.
Energen drilled and completed eighteen net wells into the Third Bone Spring sands in 2011, and completed two wells that were drilled in 2010. The company has five other stages in various stages of drilling and completion.
Energen reported that the average initial production rate of the seven wells brought on line in the fourth quarter of 2011 was approximately 485 barrels of oil and 1.08 million cubic feet per day of wet natural gas.
The average initial production rate of the 20 net wells brought on line in 2011 was approximately 400 barrels of oil and 1.04 million cubic feet per day of wet natural gas. The company’s model for Third Bone Spring sands wells called for an initial production rate of 260 barrels of oil and 735,000 cubic feet of wet natural gas per day.
Energen estimates that the company has 210 drilling locations based on 320 acre spacing. The average cost to drill and complete a Third Bone Spring well is $7.5 million.
Energen also said that wells drilled on the western side of the Pecos River have been less productive than other wells on its acreage. The wells on the western side have greater amounts of water in the production stream and steeper decline rates than expected.