The SCOOP and STACK shale plays in Oklahoma once were viewed as potentially the next Permian Basin but drilling results have disappointed, burdened by geology that has proved inconsistent that has made the area a higher-cost U.S. shale area for producers.
Producers have encountered complex geology and production weighted toward gas - at a time of a global glut and persistent low prices - and poorer results from subsequent wells than from other U.S. shale basins.
Devon Energy (NYSE:DVN) has cut planned 2019 capital spending earmarked for its STACK position to 20% from 31% in 2018, according to Reuters calculations; Cimarex Energy (NYSE:XEC) also forecasts a cut in spending in the region, to 15% vs. 30% last year; and Alta Mesa resources (NASDAQ:AMR) has struggled to survive.
Marathon Oil (NYSE:MRO) and Continental Resources (NYSE:CLR) both have anchored recent activity on two sub-areas - the STACK-Meramec and the SCOOP Woodford - narrowing development to areas where wells have produced better results.
Some firms are looking to merge or sell operations; Encana's (NYSE:ECA) February purchase of Newfield Exploration, which had the lowest median breakeven in the STACK in 2017-18, as well as operations in North Dakota and Utah, has offered hope that some deals are possible.
Roan Resources (NYSE:ROAN), whose shares trade below $1.50 vs. $16-plus last year, in April said it was studying options after receiving inquiries about a potential sale or in-basin merger.
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