ConocoPhillips announces new Niobrara Sweet Spot and 2013 Drill Program

Slide showing Niobrara Land position from Conoco Phillips Feb 2013 Analyst Presentation – Click to Enlarge

Slide showing Niobrara Land position from Conoco Phillips Feb 2013 Analyst Presentation – Click to Enlarge

On February 28th  2013, at their Analyst Meeting, ConocoPhillps’ (COP) EVP Matt Fox,  presented the company’s plans for the Niobrara Play. The Niobrara will become a new core area for Conoco.  ConocoPhillips has quietly built up 130,000 acres of a very consolidated position in Adams, Arapahoe, Elbert and Douglas counties of Colorado in what they believe to be a new sweet spot in the Niobrara. Conoco drilled 4 horizontal Niobrara wells in 2012. The results from their drill program show that the rock properties look good, and that their early production results are encouraging.  Liquid yields are higher than the Eagleford and lower than the Bakken.  Mr. Fox stated that Conoco feels so good about the liquid yields that they will drill 32 wells in 2013 and will be moving from the appraisal phase to the development phase in 2013.

To view the full Analyst Presentation click here or view the Webcast

 

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11 Responses to ConocoPhillips announces new Niobrara Sweet Spot and 2013 Drill Program

  1. Rick says:

    I’ve been reading the comments by RockPick and Shnog with great interest. Both obviously well informed folks. Shnog ‘s comment (14 May) about COP waiting until the pipeline infrastructure being finished caught my attention. I own acreage in Section 20, Township 4S, range 64W, Arapahoe County. About two weeks ago I received a letter from company called CLV Consultants, who represents Bronco Pipeline Company. Bronco is making an application to Arapahoe County for a “Use by Special Review”. Bronco is doing this pipeline for COP. The letter was informing me of a public hearing on the referenced application and inviting me to that hearing. For those of you that hadn’t received a similar letter you may interested in attending. The hearing is a Planning Commission type meeting to be held at 6:30pm (Denver time) on Tuesday, 21 May 2013 at the Arapahoe Lima Boardroom, Public Works & Development, 6954 South Lima Street, Centennial, Colorado 80112.

    The letter spells out the approx. 30 miles of pipeline proposed in Phase 1 of the gathering system. The five main lines (called Spines)are all in Sect 20, 29 and 32 of Twnsp 4S and a bit into Twnsp 5S. Four of the proposed lines appear to be well defined (Spines B, C, and connenting spine 4 & 5). Spine A is confusing, it weaves between Imboden Road and Quail Run Road. There will be four conduits in these spines: one for Gas, one for Oil, one for water and one for Fiber Optics.

    If any one attends I would appreciate feedback on what was discussed, particularly the route of Spine A. I won’t be attending, I live in Virginia. Hopefully Niobrara News will someone there to collect and report the action. I find the Niobrara News and COGCC websites to be very good sources of what is happening.

    Thanks for reading, Rick

    • shnog says:

      I spoke to somebody at COP corporate and they were kind enough to tell me that the pipeline project will be running concurrently with their drilling in Arapaho and Adams Counties, but I personally wouldn’t put it past them to slow roll the drilling schedule until the pipeline infrastructure is in, because it will save them significantly on take away costs.
      One bit of interesting information I did get from this conversation was that a lot of the drilling in Arapaho and Adams County is not scheduled till late 2014, which is much further away than they have previously indicated. I would have thought the day would be moving more aggressively than that given the way the play is heating up.

      • RockPick says:

        Shnog,

        Your impressions line up with what (little) I have gotten from COP corporate. I think that 2014 may be the year for the drilling push. 2013 looks to be a year where they prove their inferred reserves to management. COP does need to get going in 2014 however, as their 5 year State leases on Lowry will be coming due in 2017. That’s a lot of drilling if they expect to hold acreage with production. As far as the Niobrara play goes, all indicators suggest that good wells can be spotty. That is not unexpected for a tight shale (lime) with locally favorable natural fracture zones. Not much has been published on this (by the big players), however it is a logical assumption. There is the Wall Street component that pushes companies to infer a “resource play” versus a fracture play, as a resource play is a slam dunk to the bottom line. It is in all the driller’s interest to classify the Niobrara as a resource play. Production data suggests the Niobrara is more spotty than is reported in the industry’s collective “results”. Time will tell.

        Rockpick

        • shnog says:

          I’m sure you’ve read about COP selling off foreign assets and their general shift towards lower-risk domestic projects vs. what they had been persuing in Vietnam, Azerbaijan, etc. I think this is a lag year for COP in general spanning the sale of these overseas assets and their ramping up of of these local projects in full force.
          You are right about them needing to get on the stick, so to speak, as many of these newly acquired sweet spot leases actually come up due in 2014, so I would think that they would be rushing to spud wells.
          Your commentary on the complexity of the play vs. other plays is spot on, however, and the corporate geologists have their plates full, I’m sure, and the COP rep told me that they are “re-doing” much of the subsurface studies that had been performed by Anadarko’s people.
          I would like to think that the compression and shear wave data that they have compiled thus far has shown evidence of a reactive basement situation, as these are the through-faults that they call “sweet spots” in this type of soft, cyclic bedded chalk and calcareous shale.
          Otherwise, why would they invest in a pipeline?
          I know if you look at an avereage EUR map for the core Wattenberg, for instance, the figures appear much spottier than what you might think from reading the news, but I have to think that COP’s wizards are sitting on something if they are rolling miles of pipeline into this area.
          Like you say, time will tell, and this is three dimensional chess at this point.

          • RockPick says:

            Shnog,

            We are of the same mind in our thinking. You are obviously up on the particulars concerning the play. I agree 2013 will be the pivot year for COP as they move from an overseas to domestic focus, as you stated previously.

            COP corporate is definitely sandbagging the info coming out on their results, but if their results are anywhere near what Noble is coming out with, it will be a big deal. Noble is now saying the the entire Niobrara along with the Codell is productive. (No word on local geological controls – of course) This agrees with what Sonnenberg at CSM has alluded to for quite a while now. I have to imagine that COP is looking at drilling multiple horizons as well. BTW – They currently have only one “development” well drilling in Arapahoe Co. going right now.

  2. shnog says:

    Very odd.
    I spoke to a landman that I have contacted before who claims to be in the know and he said that those permits are still valid and that they just drop off the COGCC website after a year.
    I believe this is bad intel. The COGCC website is peppered with permits older than a year .
    My first thought was that they were freshening up the docs and replacing the old Anadarko documentation with their own, but I don’t know.
    The landman also changed his tune on drilling schedule. He had told me before that they planned to start drilling these Adams county wells in late summer/early fall, and now he is saying they are “not on the schedule” and that they may drill them “this year, next year or never.”
    I started feeling like I was being sandbagged a little at that point so I gave up my line of questioning as it contradicts what COP is saying in their analyst meetings.
    Whatever.
    I have an email in to the COGCC and we will see what they say.

    • RockPick says:

      I agree, that is bad intel. Permits do not drop off the COGCC website within a year. I do believe that the COP drilling schedule is not on track. If COP were to drill all those wells they have proposed this year (~30), they would have to have at least two rigs running by now. My field intel says they have only one going right now in Arapahoe Co., and I have confirmed it on the Baker Hughes site for rig counts.

      I am not quite sure what is going on with their Niobrara plan, but it is clear that the majors are now moving $ from foreign plays to US shale plays, so it is puzzling why they are not ramping up quicker.

      Hopefully the COGCC will give you some answers.

      Rockpick

      • shnog says:

        Apparently the permits do drop off the main page after year, and only the more controversial ones stay up according to my source at Conoco. The permits can still be found on the website if you look them up by well name.

        I asked the land man for many of these new acquisitions that are in the sweet spot about drilling schedule this year and he said that they have only drilled 5 well so far and therefore he thought it was very unlikely that they would get to 32 this year like they had mentioned in their analyst meeting.

        I asked somebody at Conoco corporate headquarters why they were so off on their drilling schedule this year, and his response to me was that the Eagle Ford and Bakken formations are using up the lion’s share of the equipment.
        The land man also mentioned to me that they still move very slowly during this exploration phase of the development.I had personally thought that they had gathered the seismic data that they needed and had moved past exporation phase, so I don’t know whether this statement is true or not.
        So apparently the giddy optimism put forth in the analysts meeting presentation is either not the true party line or the land man was just trying to throw me off the scent.
        However my gut feeling is that they are simply waiting until they get their pipeline infrastructure in place before they start drilling in force to save on carry away costs and local road compliance problems.
        however, I don’t have any hard data back that up, it is just a feeling.

        • RockPick says:

          That is interesting about the drop off on COGCCC records. I don’t see the reason for that as disk space is cheap, but whatever. I just heard from COP “official” and essentially got no substantial information regarding my questions. I would not put much stock in what I heard from their landman. Unless the info comes from COP corporate it’s credibility is in question. I think that’s the way they like it. Very disappointing. That is why I monitor COGCC and COP press releases as that is the only way to get an indicator of what is going on. Power On!

          Rockpick

  3. shnog says:

    Rock-

    I noticed a few days ago that all of the Adams county “Sweet spot” Conoco leases that were bought from Anadarko (Richardson, Sun Empire,Venturers, Bomhoff, etc.) have disappeared from the COGCC approved permits page at the same time. Now I was told by someone at Conoco that these wells were going to be spudded late summer/early fall.
    I wonder what this means? Any ideas?

    -Shnog

    • RockPick says:

      Shnog,

      That is odd. My first thought is that perhaps the permits were pulled because they were going to be re-issued for a 1280 spacing unit, however I do not see any requests before the COGCC to do that. Perhaps you should call or email the COGCC to find out more information. They have responded to my email requests promptly in the past. Their contact info is: E-mail your question to dnr.ogcc@state.co.us or call (303) 894-2100 for assistance.

      Please post your findings when you get some answers to your question.

      Rockpick

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