Important note: This article is not an investment recommendation and should not to be relied upon when making investment decisions - investors should conduct their own comprehensive research. Please read the disclaimer at the end of this article.
While it may appear that U.S. E&P operators have left no rock unturned in their search for new productive shale plays, elephant-size finds are still being made. The Lower Spraberry Shale in the Midland Basin is one of the industry's most spectacular recent discoveries. Several operators have convincingly demonstrated that the formation can yield prolific wells with high oil content at relatively low completed well costs. While the industry still has a lot of work to do before the play is delineated and the sweet spot distribution is fully understood, it is clear that the formation may compete in drilling economics with other primary targets in the Midland Basin stack, such as the Wolfcamp B and Wolfcamp A, and substantially expands the inventory of top-tier drilling locations.
The current earnings season may yield more positive news for investors in the stocks exposed to the Lower Spraberry Core. The play may prove to be much bigger and more prolific than has been anticipated. Similar to the Three Forks formation in the Williston Basin, the Lower Spraberry Shale may prove to effectively be a multi-reservoir play with as many as three "benches" that can be stimulated and produced independently.
If this geo-physical model of the formation is confirmed, there may be two major implications for the play.
- First, well productivity is highly sensitive to the lateral placement relative to the frac barriers. Potential for performance improvement may exist due to lateral landing optimization.
- Second, the formation may yield many more highly economic drilling locations, at least in certain areas.
QEP's Lower Spraberry Results - Spectacular
