As Noble Energy continues to experiment with multiple drilling patterns, lengths and spacing of horizontal wells, its production levels keep rising and setting records.
That experimentation is far from over. In fact, the company, which has drilling operations worldwide, is focusing 45 percent of its capital investment resources — $1.7 billion — in its northern Colorado drilling program.
Noble Energy i s starting to sound like a broken record, with reports of record production and earnings every quarter.
The news was no different Thursday as company officials reported second-quarter earnings. Revenues, sales and production levels all hit records.
“While we’ve certainly had a strong first half of the year, we’re also positioned well to set new records through the remainder of 2013,” Noble chairman and CEO Chuck Davidson told analysts in a conference call Thursday morning.
Noble and Anadarko Petroleum are the top-two oil and gas exploration companies operating in Weld County and can account for roughly half of the county’s 20,000 wells. Anadarko is due to release its second-quarter earnings next week. Both companies have raced in the last few years to set benchmarks for production and ingenuity in this increasingly important play.
Noble’s Denver-Julesburg Basin operations — essentially all of Weld County — saw a 100 percent increase in horizontal well production to an average of 50,000 barrels of oil equivalent per day from the same time last year, according to its second-quarter earnings presentation. In total, the DJ basin’s drilling saw an average of 90,000 boe/day production, a 22 percent increase from the same time last year, the release stated.
The company expects the records to continue next quarter with an anticipated 12 percent production increase of 30,000 barrels-a-day from the second quarter, largely in part to its Colorado drilling. The company’s U.S. production was 140,000 barrels of oil equivalent (crude, natural gas and natural gas liquids) per day in the second quarter, according to the company’s news release.
The global drilling company plans to continue to improve production and cost efficiencies by drilling horizontal wells that reach farther into the pay zone more than a mile beneath the surface.
Horizontal drilling starts vertical, then turns parallel to the surface into the zone that is being drilled. That zone is then “fracked” in several stages to release the resources. As Noble experiments with more fracking combined with longer laterals — last quarter, it reported drilling the longest lateral in Colorado at more than 9,100 feet — operating efficiencies result.
The company is on target to drill 300 wells this year. Through the first half of the year, it drilled more than 130 horizontal wells, including 16 extended-reach laterals.
“As mentioned in our call last quarter, we continue to see the performance of the 9,000-foot extended-reach laterals on average in excess of the 750,000-barrel equivalent type curve,” said Dave Stover, president and chief operating officer for Noble. “And a number of the wells are performing in line with 1 million-barrel equivalent (estimated ultimate recoveries).”
The company plans to test the limits on those, as well as areas that in the past have not seen much growth in northern Colorado.
“So far, we’ve had the chance to get some semblance of testing on maybe another 20,000 to 25,000 acres that we put in the category of more encouraging also at this point,” Stover said in response to analyst questioning. “So there’s still areas to go up here, and I think probably in total this year we’ll drill 15 to 20 of what I’ve called these appraisal wells up here in northern Colorado and areas that we really haven’t defined or really included yet.
“There’s a lot more to come on this, and we’re still very encouraged. ... We’re still early in this game of unlocking all the resource value up here,” Stover said.
They’ll also vary the mix of the wells in differing zones and differing lengths to come up with the magic formula, so to speak, for drilling the three benches of the Niobrara zone, and the Codell formation immediately below.
“A large part of the focus is testing these different multi-layer horizons … It’s not going to surprise us if we don’t have more wells per section where you’ve got a combination of the B (zone) and some mix of these other zones depending on their thickness and different parts of the field,” Davidson said.
The company’s officials plan to accelerate its Colorado drilling by adding 500 wells per year by 2016 — double that of last year.
This year the company is on target to drill 300 wells, 131 drilled so far. Production in the second quarter was held up slightly by late spring storms, officials said. The second half of the year will ramp up drilling efforts to meet their target.
The company’s drilling in Colorado is divided into what is called the Greater Wattenberg, which is north and south of Greeley and the East Pony area, which in the northeastern portion of Weld County. Both are at the center of Noble’s drilling in the Denver-Julesburg basin, which blankets all of the Colorado Front Range, into Wyoming, Nebraska and western Kansas.