It is a Bunch of Good News
Today, Continental Resources announced a much awaited update on their Project Springboard development in central Grady County.
Row 1 has been completed and results are in-line with expectations
Enhanced development plan will shed CAPEX costs while increasing EUR per well to 1.3 MMBoe (from 1.2 MMBoe)
While others are considering laying rigs down, Continental is pushing forward
7 Springer rigs running drilling rows 2 and 3 (out of 5) as we speak with 16 wells awaiting completion and
5 Sycamore/Woodford rigs running with 17 wells awaiting completion
The Triple H results are announced to be 1,516 boe/d average IP per well with a 6,065 boe/d combined IP leading to a 1.3 MMBoe type curve
In stark contrast to the Permian, marketing advantages associated with the Project’s close proximity to Cushing, and ample takeaway capacity, have lead to less than $2.00/bbl crude oil differentials
Changes Since Original Announcement
What’s changed, however, since Continental’s bombshell of an announcement in May 2018?
Drilling and Spacing Units. It appears all sections originally flagged as “non-operated” have been converted to “operated”, implying an acreage swap with another operator (ahem, Marathon) has been achieved
Springer: 29 operated units have now turned into 32 operated units (including the Hartley unit)
Woodford: 32 operated units have become 31 operated units (the Woodford developmental units were originally announced in Continental’s August 2018 investor presentation)
Sycamore: development units shown for the first time
Springer development is planned to be complete by YE 2020 at current pace of development
Continental announces a 17% minerals ownership in and to the project
As Continental marches south in the development plan, reservoir pressures are increasing
Economics
While Continental boasts a 30% increase in lateral length (from 7,500’ to 9,800’), the corresponding EUR increase is only 8% (from 1.2 to 1.3 MMBoe). Meanwhile Continental is reducing well costs 5% (from $10 to $9.5 million) leading to a reduction of 20% in cost per lateral foot. It remains to be seen if the cost efficiencies end up out-gaining the marginal increase in EUR (type curve still likely still based upon a 6% Dmin).
About Project Springboard
Initially announced as 350 wells to be drilled in a 9 square mile area of central Grady County comprised of 100 Springer wells and 250 Sycamore/Woodford wells. In the face of strong public market and commodity price headwinds, these original plans have largely remained unchanged. It is, by far, the most ambitious development project in Oklahoma’s Anadarko basin to date.
Top 3 Investors in Project Springboard since 2018
Mineral Resources Company (Continental Resources)
Brigham Minerals
Hefner Energy Holdings
Springer Development Plan
The third revision of the Springer development plan (originally announced May 2018, revised August 2018). It was announced the Springer is 15-90’ thick across the project with 3-4 wells planned per DSU. All wells will be completed by YE 2020 based upon current pace of development.
Sycamore Development Plan
A first look at Continental’s Sycamore development plan. The Sycamore was announced to be 150-200’ thick across the project with 2-4 wells planned per DSU.
Woodford Development Plan
The second look at a revised Woodford development plan (first revealed August 2018). It was announced the Woodford is 125-200’ thick across the project with 5-6 wells planned per DSU.
