The Niobrara shale formation is situated in northeastern Colorado and parts of adjacent Wyoming, Nebraska, and Kansas. Primarily an oil play, it is in the Denver-Julesburg Basin, which has long been a major oil and gas province. The Niobrara has three major pay zones — A, B, and C - throughout most of the formation. It has been compared by some to the Bakken shale formation farther to the north.
Here is some of the latest activity from the Niobrara.
Denver-based PDC Energy plans to invest a total of $469 million in the Wattenberg Field in Colorado, beginning 2014 with four horizontal drilling rigs and plans to add a fifth operated horizontal drilling rig in the second quarter of 2014. The Wattenberg budget for 2014 includes spudding 115 gross operated horizontal wells, with 59 horizontal Codell wells and 56 horizontal Niobrara wells. These drilling plans include 19 wells with extended length lateral completions of approximately 7,000'. The company also plans to reinitiate its vertical well refrac program.
About $100 million of PDC's total Wattenberg capital budget is allocated for non-operated projects including participation in a 26-well per section downspacing test in the Niobrara formation in the northeastern portion of the core Wattenberg Field. Results from the test will target the Niobrara B and Niobrara C benches and could further expand the company's 3P resource potential in the Field.
In mid-December, Bill Barrett Corp. closed on its previously announced sale of the West Tavaputs natural gas property located in the Uinta Basin, Utah, to affiliates of EnerVest Ltd. for a total adjusted transaction value of $369 million.
Jason Wangler of Wunderlich Securities Inc. called the deal "an important milestone as we believe the company and its management have officially delivered on essentially all goals for 2013 as it continues to actively work in the Niobrara," noting that investors should now be focused on the Denver-based company's "solid Niobrara position that so far has been nothing short of impressive."
Barrett continues to focus the large majority of its capital spending on its Niobrara position while also spending/producing in the Uinta, Powder River and Piceance basins. "All of these areas have ample liquids content and generate positive earnings and cash flow, but we believe Barrett is moving more into the Niobrara given its strong economics and ample inventory," he continued.
Currently, Bill Barrett has four rigs running in the Niobrara drilling on a 40,000 net acre position in the northeast extension. The company also holds 14,000 net acres in the core of the Wattenberg field. With close to 40 wells expected to come online in the near-term, production should increase the nearly 500 boepd results from its initial wells, Wangler concluded.
Denver-based Lilis Energy Inc., an independent oil and gas exploration and production company focused on development in the Wattenberg Field and the surrounding D-J Basin, has closed on a $7.5 million financing in the form of a private placement of restricted units, with each unit consisting of one share of its common stock and one common stock purchase warrant.
The company says it intends to use the proceeds from this financing to fund its Wattenberg drilling program, and for working capital and general corporate purposes.
"This financing provides Lilis Energy with the capital required to complete the initial development phases on both of its key Wattenberg prospects that will target the horizontal development of the Niobrara and Codell formations," said Avi Mirman, the company's president.
Mirman added: "Our immediate plans include the drilling of five horizontal wells in our North and South Wattenberg Prospects. Full development of both of these prospects will require the drilling and development of up to 18 horizontal wells."
Entek Energy Ltd. has acquired all of the remaining jointly held Niobrara assets within Colorado and Wyoming from a former partner, covering the Niobrara oil resource play. The acquisition comprises approximately 13,500 net acres in the Focus Ranch Unit in addition to an approximately 42% net interest in the Slater Dome export pipeline. The total consideration paid by Entek for these assets is US$2 million, with no retained royalties or ongoing obligations on the former partner's part in relation to the assets.
The acquisition has increased Entek's interest in the Focus Ranch Unit to approximately 32,000 net acres across the total 36,000 gross acres under lease, with its interest in the Slater Dome pipeline having increased to approx. 98%. Both assets are operated by Entek.
Armada Oil Inc. has closed an asset reallocation financing transaction with Gulfstar Resources LLC, a private energy investment group. This transaction will allow the company to pursue additional producing property acquisitions, as well as additional drilling and development on its current multiple acreage positions in an effort to increase production and reserves.
Proceeds from the transaction, if funded, are slated to be used to drill an initial horizontal Niobrara well in the company's Anadarko farm-out acreage position in Carbon County, Wyoming.