Newfield Exploration Co. has increased its production guidance for the second quarter and the full year, crediting the Anadarko Basin’s stacked reservoirs for exceeding expectations yet again.

The Woodlands, TX-based independent, which works in the U.S. onshore and in China, expects 2Q2016 net production to exceed the midpoint of guidance by about 500,000 boe to average 15.2 million boe, versus a previous range of 14.4-14.9 million boe. U.S. net output is expected to be more than 13.6 million boe, versus a previous range of 13-13.5 million boe. For the year, total net output is expected to be 56-58 million boe from previous guidance of 54.5-56.5 million boe.

Newfield’s legacy properties in the up-and-comer Sooner Trend of the Anadarko Basin, mostly in Canadian and Kingfisher counties, i.e. the STACK, is responsible for the uplift, CEO Lee Boothby said.

“Our Anadarko Basin production continues to exceed expectations, with strong well performance across our expanding footprint,” he said. “We have now production-delineated more than 95% of our legacy STACK position…and after nearly 100 wells and four years of drilling activity, we continue to deliver wells on or above our average type curve. This is great news and reinforces the consistency of well results, the depth of our inventory and the continual improvements in rates of return that we believe will come in full-field development.

“Recent drilling and completion efficiencies are leading to ‘best in class’ wells, both in terms of costs and production performance. Today, we anticipate drilling development wells for less than $6 million (gross) and we expect to have a portion of our STACK rig fleet in active field development in 2017.”

To put a cherry on its success in the Anadarko, the company said net production now comprises about 56% of total domestic production. Output is expected to average more than 83,000 boe/d in 2Q2016, up 6% from 78,400 boe/d in the first three months of this year.

Newfield has been a pioneer in Oklahoma’s stacked reservoirs and has steadily increased its position. Last month it agreed to pay Chesapeake Energy Corp. $470 million to tack on 42,000 net acres in the Meramec reservoir, which boosted its position overall to 350,000-plus acres (see Shale Daily, May 5).

The three most recent extended laterals in the STACK’s eastern area — Edgar, Vickie and Church — are tracking in-line with its 950,000 boe gross average type curve through 90 days of production. Edgar had an initial gross 24-hour initial production (IP) rate of 1,162 boe/d and averaged 751 boe/d over three months; Vickie IP’d at 1,236 boe/d and averaged 774 boe/d; and Church IP’d 1,271 boe/d and averaged 740 boe/d. The Alphons well, also located in the eastern portion of STACK, was drilled and completed for $6.3 million gross and had a recent gross 24-hour IP rate of 1,178 boe/d, of which 94% was liquids and 88% was oil.

Costs are falling as well, the operator noted. The Helen well in the northern part of the STACK recently was drilled and completed for a “company best” $6.2 million gross including facilities, compared with a previous record well costs of $6.9 million. And better costs didn’t affect the IP rates, as Helen had an initial gross 24-hour IP rate of 1,548 boe/d and averaged 1,168 boe/d gross over its first 30 days of production.

Newfield also touted the Pearl well, which had a 24-hour IP rate of 2,233 boe/d gross. Over its first 30 days, Pearl averaged 1,780 boe/d, and over the first 60 days, it was 1,644 boe/d. Pearl also was drilled and completed for $6.7 million gross, including facilities.

The initial STACK infill spacing pilot, the Chlouber, is underway now as the first of two planned pilots to test downspacing and provide information important to full-field development activities planned for 2017.

Tudor, Pickering, Holt & Co. (TPH) analysts said if the Chlouber spacing test now underway proves successful, it “could prove the viability of development at 15 wells/section including the Woodford,” which would add $4.00/share to its $37/share proved, probable and possible net asset value.

Wunderlich Inc. analyst Vedran Vuk said Newfield’s latest results point to the operator hitting on all cylinders, particularly in bringing down costs while maintaining strong output.

“The Helen well set a company best record at $6.2 million, below the 1Q2016 record well of $6.9 million,” Vuk said. “And the Helen was no fluke; the Pearl well was $6.7 million and the Alphons on the eastern side of the acreage was $6.3 million. With well costs this low already, we wonder whether the development mode target well of $6.0 million is too conservative especially on the eastern acreage.”

Newfield also has “tons of optionality on where to drill,” Vuk said. With its acreage position “now basically covering the entire STACK, the company can choose between areas with lower well costs, slightly higher costs, stronger IP rates, or slightly lower rates. Furthermore, the company has plenty of less delineated acreage such as western Blaine County and Dewey County. We are still in the early stages of figuring the optimal combination of these factors to get the best returns.”

Improved drilling techniques are tapping into reservoirs today from Oklahoma’s carbonate, limestone, sand and shale in other formations, which in addition to the Meramec and Oswego include the Atoka, Caney, Tonkawa, Cleveland, Marmaton, Springer, Hunton Lime, Hogshooter and Osage. Information about Oklahoma’s stacked plays are included in NGI‘s North American Shale & Resource Plays Factbook, which was updated earlier this year.