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    Well results lower than Bakken Shale, but Mississippian gets boost from lower drilling costs

    IHS

    Despite weaker well results than those in the prolific Bakken Shale play, shallower wells and cheaper drilling costs are boosting economics and driving increased industry interest in the Mississippian Oil Play, according to a new report from IHS. The more than 17 million acre play spans Northern Oklahoma, through Western Kansas and into southern Nebraska.

    “The Mississippian’s highly variable drilling results to-date, combined with increasing entry costs, might deter new entrants, but recent drilling reports suggest results could improve as knowledge of the play and technical adjustments increase,” said Paul O’Donnell, energy equity analyst at IHS, and author of the IHS Herold Mississippian Oil Play Regional Play Assessment. “This is a shallow carbonate play, with depths ranging from 3,000 feet to 6,000 feet, and since it’s shallower than other US unconventional plays, operators can employ less expensive, lower horsepower rigs to drill it.”

    The reservoir averages 300 feet to 500 feet thick, with the Woodford Shale as its source rock. Using the lower horsepower rigs (about 1,000 horsepower) drilling costs run an estimated $2.9 million to $3.5 million per well, as compared to an average of $8 million to $11 million per well for the Bakken.

    According to the IHS report, SandRidge Energy has an early mover advantage and is most leveraged to the Mississippian, as measured by acreage in the play per million dollars of company enterprise value. SandRidge is driving the play’s development, and recently reported a 2,200 barrel-of-oil-equivalent per day well (first 30-day average) that could make Alfalfa County, Oklahoma, one of the best spots in the play.

    Said O’Donnell: “Other than SandRidge, no publicly traded company has material leverage to the play, consequently, we believe the play will be a good ancillary asset for most companies, rather than a ‘company-changer.’”

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