Newfield Exploration Co. is planning to learn a lot this year in the Anadarko Basin, allocating about 85% of a slightly larger capital budget to Oklahoma’s stacked plays with a number of goals in mind.
Newfield’s focus is the SCOOP, the South Central Oklahoma Oil Province, and the STACK, the Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties.
“We're gathering critical information that we will apply to our future development drilling campaigns,” CEO Lee Boothby said Wednesday during an earnings conference call. “We have our sites focused on several key objectives today in the Anadarko Basin.”
One of the objectives is further enhancing completions. So far, the company has seen “superior results” using higher fluid and sand concentrations for its fractures (frack): 2,100 pounds/foot of sand and 2,100 gallons of liquid/foot.
“We're testing a few jobs that are significantly larger as well, and we’re tweaking multiple variables in our completions to identify the best path forward to maximize value,” he said. Variables include fluid chemistry to reduce friction, the use of diverters and dissolvable frack plugs, increased frack stages and stage lengths and tighter perf [perforation] clusters, among others.
This year the company has completed 15 wells with the 2,100-2,100 completions. “...[R]esults continue to be very strong,” Boothby said. “These wells are outperforming our 1.1 million bbl type curve by a significant margin.”
Another area of focus this year is optimizing well spacing in the Anadarko Basin. Newfield is working to understand how best to drill from multi-well pads with its optimized completion designs. “Although, we certainly won't have a definitive answer to share, the information will help us better define our optimal development well-type curve,” Boothby said.
The company has three development pads in progress in the STACK. Early flow data from these pads is expected to be available late this summer, he said.
Newfield is also working to address natural gas takeaway capacity from the Anadarko. The company is a foundation shipper on Enable Gas Transmission LLC’s Cana and STACK Expansion (CaSE) project, which ould serve Anadarko production.
Newfield signed up for 205,000 Dth/d of firm service under a 10-year contract, with an initial capacity of 45,000 Dth/d expected to be available early next year. On Wednesday Boothby noted that CaSE is not a greenfield project, giving the company additional confidence that the project timeline will be met.
Newfield first quarter net production exceeded the midpoint of domestic and international guidance ranges. Domestic net production was nearly 139,000 boe/d (40% oil and 60% liquids), exceeding the midpoint of original guidance by 6,000 boe/d. Consolidated net production was 146,000 boe/d (43% oil and 62% liquids), compared to the mid-point of original quarterly guidance of 140,000 boe/d.
Newfield also raised its full-year 2017 production and capital investment outlooks. The midpoint for 2017 domestic guidance was raised more than 4,500 boe/d to 148,600 boe/d from 144,000 boe/d). The company now estimates that its year-over-year domestic production growth, adjusted for prior-year asset sales, will be about 7%.
The midpoint estimate for total company production was raised more than 5,000 boe/d and is now 155,100 boe/d from 149,850 boe/d).
This year’s capital budget was increased to $1.1 billion from $1 billion. Newfield has allocated about $100 million to test prospective horizons on its existing acreage. In the Anadarko Basin, this program has been named SCORE for Sycamore, Caney, Osage, Resource Expansion. More details are to come later.
For the first quarter Newfield reported net income of $147 million (73 cents/share) compared with a net loss of $624 million (minus $3.52) in the year-ago quarter.