Current APC Stock Info

Q1 production up despite low 2016 activity; Anadarko drills a long lateral in record 5.2 days

Two major Niobrara players, Anadarko Petroleum (ticker: APC) and Bill Barrett Corporation (ticker: BBG) held conference calls today, reporting similar strategies for success in the basin.

Anadarko reported sales of 242,000 BOEPD from its DJ basin properties, a slight increase from Q1 2016 despite reduced activity in 2016. The company added one rig this quarter, and now has six operated rigs and two completion crews active in the basin.

Anadarko, Bill Barrett Add Sand, Reduce Stage Spacing in DJ Basin

Source: Anadarko Presentation

Anadarko continues to drill quicker wells, reporting a new record for completing a long lateral well: 5.2 days. For reference, in Q4 2016 the company reported a record of 5.5 days to complete a long lateral in the basin.

Like many unconventional operators in the U.S., Anadarko has been experimenting with more intense completion designs. Recent wells have been completed with increased fluid volumes and tighter stage spacing. The company reports that early results from these new wells show improvements of over 10% relative to older designs.

Anadarko’s Advanced Analytics and Emerging Technology group is designing these improvements based on data from the company’s old wells. In today’s conference call, APC Senior VP of U.S. Onshore Exploration and Production Brad Holly commented “we’re really excited about what we’re seeing in the DJ because we have done over 1,000 wells out there. We’ve taken all that data along with everything we’ve seen in the industry and really ran it through our advanced analytics and looking at every component that makes up that fracture thing.

“We’re working on increased fracture intensity, which is really we’re trying to bust up the rock as much as possible. We have shrunk our stage basin as well as increased our fleet volumes and we’re continuing to tweak that recipe. We did a few of those in the fourth quarter of 2016 and we started to do quite a few more of those in the first quarter of 2017.

“So, we put some of our early results out in the ops report and we’re continuing to watch results, but we’re encouraged and excited about what we’re seeing from the new completion design. We continue to tweak that and we’ll have more information as we get more production results.

“We’re certainly looking at more fluid, and I think we’re playing with some of the other parameters and what combinations to pump these things.”

Bill Barrett design improvements give 45% ROR

Bill Barrett Corporation has reported similar keys to success. Current completion designs involve increasing sand concentration and decreasing stage spacing. Based on the past two years of production history increasing sand concentration from 1,000 lbs/ft to 1,200 lbs/ft improves production by 36%. Similarly, decreasing stage spacing from 170 ft/stage to 120 ft/stage indicates 10% or greater cumulative production. Bill Barrett is combining these improvements this year, with a base design of 1,500 lbs/ft of sand and frac spacing of 100 ft/stage to 140 ft/stage. These design enhancements have improved well returns to about 45% at current prices.

Anadarko, Bill Barrett Add Sand, Reduce Stage Spacing in DJ Basin

Source: Bill Barrett

Bill Barrett President and CEO R. Scot Woodall mentioned that further improvements are possible, depending on the results of current wells. “We obviously are kind of watching what others are doing as well,” Woodall commented, “but I know a current pad that’s being completed right now is going to go to 100-foot stage spacing. So that’ll be testing one of the lower ends. And I think we’ll have to look at some results of the 1500 pounds and see if we need to go larger or not. There’s some operators that are doing some more. I think we can look at those results. So I think we’ll evolve throughout the year a little bit.”

In total, Bill Barrett plans to drill 70 to 75 wells in the DJ basin this year. The company currently  has one active rig in the basin, but plans to add a second during Q2 2017. First quarter production from the DJ was up 22% year-over-year at 14,200 BOEPD.

Quarterly results improving year-over-year

Anadarko reported a net loss of $318 million, or ($0.58) per diluted share, vastly exceeding the company’s Q1 2016 loss of $1 billion. Bill Barrett reported a net loss of $13 million, ($0.18) per diluted share, up from the $46.5 million loss the company reported this time last year.


Legal Notice