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Midland, Delaware Basin Wolfcamp Outlook Seen 'Greatly Improved'

Permian Basin-focused Energen Resources Corp., said Wednesday its first well to test the upper Wolfcamp Shale in the Midland Basin and three upper Wolfcamp wells in the Delaware Basin have shown "excellent results."

Energen Resources is a unit of Birmingham, AL-based Energen Corp.

"We have said before that success in even one of the sub-basins would be a significant development for a company our size," said Energen Corp. CEO James McManus. "When you combine the results of our own wells with recent results of other operators, we believe the outlook for success in both basins has greatly improved.

"Energen could well be a major driller in the Permian Basin for many years to come. Large-scale success in multiple benches of the Wolfcamp could result in more than 5,300 unrisked locations based on 80-acre spacing and 4,400-foot laterals. Even heavily risked, Energen's Wolfcamp potential is significant."

McManus said that based on well results, multiple benches of the Wolfcamp will be productive and the play is suited for pad drilling, which would enhance well economics.

"In the second half of 2013, we plan to add a horizontal rig in the Midland Basin and increase the number of wells we drill this year from six to nine," he said. "We also will drill progressively longer lateral lengths, up to 7,500 feet. Our second Glasscock County well is currently being completed, and we have just started drilling the vertical section of a third well."

Based on 80-acre spacing and 4,400-foot laterals, Energen estimated that it has 347 potential drilling locations in the upper Wolfcamp in Glasscock County alone. Success in all three benches across the company's 70,000 net acres prospective for the Wolfcamp in the Midland Basin would translate into some 2,000 potential drilling locations, Energen Resources said.

In the Delaware Basin, more work needs to be done to fully understand the thick shale formation, McManus said.

"Our first operated well in Reeves County is generating impressive early rates similar to those recently disclosed by other operators," he said. "Even though the basin tends to become more 'gassy' as you move from east to west, as supported by the well results we have disclosed today, total production from wells such as the E. J. Brady 56-1 #1H support favorable economics."

The company is currently drilling two Wolfcamp test wells in Reeves County with plans to drill five more this year. "Based on 80-acre spacing and 4,400-foot laterals, success in just one bench of the Wolfcamp in Reeves County could mean almost 700 potential drilling locations on our 56,000 net acres," McManus said. "On the east side of the Delaware Basin, we are starting to get a better understanding of the Wolfcamp potential. We still have more to learn but are off to a good start."

In Ward and Winkler counties, the company is focused on continued testing of the upper Wolfcamp, stimulating the wells with slickwater frack jobs. The company is currently completing an upper Wolfcamp well in Ward County.

"We have approximately 47,000 net acres in Ward and Winkler counties that we believe are prospective for the upper Wolfcamp and, possibly, the middle Wolfcamp," McManus said. "Based on 80-acre spacing and 4,400-foot laterals, success could lead to an estimated 587 potential locations in each of the two, uppermost benches.

"While we have not yet drilled in Loving County, we like what we are seeing in the geologic and petrophysical mapping. We have almost 12,000 net acres prospective for the upper and middle Wolfcamp in Loving County, for approximately 300 potential drilling locations."

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