Midland, TX-based Ring Energy Inc. continues to get results from its horizontal wells in the Permian Basin’s Central Basin Platform (CBP).
In a 1Q2017 operations update this week, Ring said it drilled seven new one-mile-lateral horizontal wells in its San Andres asset in the CBP during the quarter. The exploration and production company completed five of those wells, which averaged gross 24-hour initial production (IP) rates of 660 boe/d, with a range of 377 boe/d to more than 800 boe/d.
Ring, a long-time vertical driller in the CBP, previously detailed the results from its initial three-well horizontal program in the San Andres. This included its Augustus #1H and Tiberius #1H wells, which produced 602 boe/d and 448 boe/d respectively through 45 days, with production 95% weighted to oil.
On Wednesday, Ring management said the initial results from the CBP wells completed during 1Q2017 have exceeded expectations.
"When we initiated our three-well pilot horizontal drilling program last year, we had certain expectations based on the extensive review and due diligence we performed on both the current and historical results of neighboring operators," said Danny Wilson, executive vice president of operations.
"As of the end of the first quarter, we have drilled a total of 10 horizontal San Andres Wells on our CBP. Of these, two are 1.5 mile laterals, one is a 1.25 mile lateral and the remaining seven are one mile laterals. Our original average net estimated ultimate recovery (EUR) target when starting the program was 55 boe per lateral foot, with the knowledge and understanding that some wells will be more productive than others.
"The initial results on the longer laterals are showing preliminary net EURs of 35-55 boe/foot. Based on a net received oil price of $45/bbl and a drill and complete cost of $2.4 million, those wells will yield over a 90% internal rate of return (IRR) on the lower end, up to an IRR over 240% on the higher end."
Wilson said the one-mile-lateral wells are on track for EURs between 40 and 100 net boe/foot, yielding a greater than 70% IRR at $45/bbl and a drill and complete cost of $2 million.
Ring's net production for the quarter totaled 266,000 boe, up 18% year/year and 10.8% sequentially. Average net daily production totaled 3,618 boe/d, compared with 2,370 boe/d in March 2016, the company said.
CEO Kelly Hoffman said Ring added 10,000 gross acres to its horizontal footprint in the CBP in 1Q2017, bringing the company's gross horizontal CBP acreage to more than 54,000 (30,000 net), including over 500 gross (285 net) horizontal drilling locations.
"We continue to seek out opportunities that complement our existing asset base while optimizing our current portfolio and growing our production, inventory and reserves," Hoffman said.
Also during the first quarter, Ring drilled two new saltwater disposals in the CBP and continued to expand its oil, gas and water infrastructure in the play.
In the Delaware Basin, Ring drilled two new vertical wells and one new saltwater disposal well, and recompleted two existing wells in its Cherry Canyon asset.