Given the success operators have reported when marching across the booming Barnett Shale gas play in northeastern Texas, every other shale play in the country is getting renewed attention. The Barnett is one of several related shale plays that roughly follow the northern side of the Ouachita Mountain Front from West Texas to southeast Oklahoma to northern Arkansas. Several operators have mounted impressive leasing and drilling campaigns in their respective shale theaters of operation. And no wonder: These plays typically cover a wide swath of acreage, creating what the industry loves: low-risk, wide-spread repeatability and thousands of drilling locations. (For more on this, see "Paleozoic Gas Shales," Oil and Gas Investor, July 2005, and "Far West Texas," January 2006.) At press time, Devon Energy Corp. was estimating it can ultimately recover a whopping 8 trillion cubic feet of gas from its commanding position in the Barnett, now that it has taken in the assets of Chief Oil & Gas for $2.2 billion in cash. Southwestern Energy Co.'s multimillion-dollar commitment to the Fayetteville Shale in Arkansas is well known. The company recently reported that its gross production in that play had reached 30 million cubic feet a day, with its rig count of 10 in early June expected to rise to 18 by year-end. Multi-stage slickwater fracs on horizontal wells have been the key. But this fall, all eyes will turn also to the Woodford Shale in southeastern Oklahoma. It centers on Hughes, Coal, Pittsburg and Atoka counties. This shale play is still early in its development and learning curve, but three distinctions make it "friendlier" right away: there is little or no water production, unlike in the Barnett Shale, there is little or no karsting, and most of the drilling takes place in a rural corner of Oklahoma where it is easier to get permits and move equipment, as opposed to the crowded subdivisions around Fort Worth. (Prime acreage southwest of McAlester, the Pittsburg County seat, is off limits, however, because it's the site of a U.S. Army weapons depot.) Plenty of old vertical wells in the area lend well-control data, meaning few surprises. The industry should get its first glimpse of the value assigned to this developing shale play in late August, when bids are due for privately held Brighton Energy LLC. The Tulsa company operates 41 of the 70 sections in which it has interest and will have 16 Woodford wells down by August, according to Steve Barr, principal of M&A advisory firm Richardson Barr, which is handling the sale. "This deal will be the first test of what value the market puts on the Woodford Shale in a sale process," say Barr, "although we know that leasing prices have gone through the roof compared with two years ago." Brighton partners primarily with Denver-based Antero Resources, which is building a new cryogenic gas plant in Atoka County with a capacity of 30 million cubic feet per day. The partners have five rigs operating in the play. Richardson Barr estimates they have identified 600 undeveloped locations. Following its entry about two years ago, Devon Energy has gotten more involved in the Woodford, desiring to apply its industry-leading expertise from the Barnett in another shale play. It has 88,000 net acres, mostly in Hughes and Coal counties, with some in Pittsburg and Atoka counties. Last year, it drilled 10 wells in this play, mostly horizontal, using slickwater fracs. At press time, it had 11 operated horizontal wells producing 13.5 million cubic feet a day, gross. "We call this the Arkoma Shale," says Brad Foster, Devon vice president and general manager, central division. "We have three rigs running now, and we're having some thoughts about picking up one more. We hope to drill (operated and nonoperated) 24 wells by year-end." Devon will spend about $80 million on land acquisition, seismic and drilling this year in the Woodford Shale play. "We just started to ramp up. It's still early and everybody's trying to understand what the decline curves are going to be, and where the boundaries to the play really are." What about the inevitable comparison to the Barnett? Foster says the Woodford looks "encouraging and viable, but I'd also agree that it may not be as good as the Barnett. We still need more production history to understand it." He says more pipeline takeaway capacity needs to be built in Hughes and Coal counties, although Pittsburg County to the northeast is the site of the famed Wilburton gas field and its attendant infrastructure. Others in the play include Chesapeake Energy, with about 100,000 net acres. The company plans to drill its first well there this summer. Petrohawk Energy Corp., XTO Energy Corp. and St. Mary Land & Exploration also are involved. Companies with acreage held by longtime production in the Hunton, Wapanucka and Cromwell zones are pursuing the Woodford Shale now that shales have become economically viable. If the Woodford succeeds, they'll go on to the Caney Shale-the Caney is the geologic equivalent of the Barnett Shale. The dominant player Today, the company with the strongest position in the Woodford Shale is Houston-based Newfield Exploration Co., which began its involvement in 2003. It made its first Woodford Shale discovery that year. Its first horizontal Woodford well, the Blevins, came onstream at the end of 2004. Since that time, Newfield has assembled about 115,000 acres across four counties. Newfield holds at least a 25% interest in 243 sections, and some 150 sections are held by production already. If spacing were on 80 acres, about 2,000 gross locations are possible (excluding a 25% estimated acreage impairment for subsurface issues, i.e. faulting), according to the company's estimates. Should spacing be ultimately reduced to 40 acres, the well count doubles to nearly 4,000 gross locations. When Newfield started leasing several years ago, land was going for $200 to $250 per acre. Now leases are commanding $800 to $1,000 per acre, if available at all, as the most prospective acreage in the play is pretty much locked up. Chief executive officer David Trice told investors and analysts after a tour of the Woodford in May that at the company's 2005 Christmas party, he placed the Woodford high on his Top 10 wish list. "I told them I want one horizontal Woodford well drilled under budget and producing 3 million cubic feet per day, a settlement of the Blackberry [PDA] litigation, and another Woodford well drilled under budget that produces 3 million a day, and a third, and then...." The operations people who work in the Woodford got the message. "Mission numero uno is to drill one well per section, to hold our acreage by production. Next, we can prove up the concept and figure out the best way to develop this," says Lee K. Boothby, president of Newfield's Midcontinent division. "We have more than 100 vertical Woodford wells producing to date and our recent efforts have shifted to a horizontal drilling program. The wells drilled to date give us a high degree of confidence in the potential for this play." Newfield's current Woodford Shale gross operated production is nearly 50 million cubic feet per day, gross. Newfield operates more than 100 verticals and 15 horizontals. The company has six rigs drilling horizontally and one drilling vertically. Newfield is making plans to increase its rig count to as many as 10 rigs by year-end 2006. It plans to drill 75 Woodford wells this year, of which about 60 will be horizontals. Finding and development costs are running near $2 per thousand cubic feet. The shale is about 130 feet thick in the northern part of the acreage and thickens to as much as 200 feet in the southern reaches of Newfield's acreage. It is significantly thinner than the Barnett and found at deeper depths, but importantly, it is thought to have a higher silica content of 60% to 80%, versus 40% to 60% found in the Barnett. This makes the rock more brittle, and thus, the fracs more effective, notes Calyon Securities (USA) Inc. analyst Carin Dehne Kiley, who initiated coverage of Newfield in June. "Perhaps the project with the greatest upside in Newfield's unconventional gas portfolio is the Woodford Shale, which currently accounts for about one-fifth of its Midcontinent production," she says. "We should note that although it has logs and production data from nearly 100 vertical wells, Newfield has only drilled 10 operated horizontal wells [as of June], with only two of these producing for longer than 60 days." Operators in the Barnett say the average gas recovery per well is about 2 billion cubic feet (Bcf) per well, but that ranges from an upper quartile average of 4 Bcf per well in the sweet spots to only 0.5 Bcf for wells in the bottom quartile, located on the flanks of the play. "We believe our wells on average will produce 2.5 to 3 Bcf. The bottom line is, we think the Woodford is special," says Sam Langford, Newfield manager of commercial development. The shale contains only 13% clay, so swelling is not a problem when drilling. More important is the silica content, which averages 71% and ranges from 50% to 90% in the cores Newfield has taken from the zone, he says. To date, most of the drilling has been guided by more than 1,000 miles of 2-D seismic data, but Newfield is in the process of shooting 3-D surveys over most of its acreage. The key question now? How much of its acreage will yield the "average" well results and how much will be impaired by surface or subsurface factors? If gas is $6 per million Btu, a completed Woodford Shale well costs $4 million and 2.75 Bcf equivalent is the expected-case estimated ultimate recovery (EUR) on the type curve Newfield is projecting, then the company's internal rate of return would be 24%. Late this year and next, Newfield hopes to ramp up pilot programs to test 40- and 20-acre spacing. Meanwhile, if 80-acre spacing is maintained, the company says it has about 1,000 potential net locations to drill, assuming 25% of the acreage is impaired. What does this mean? It translates into an impressive 2.2 trillion cubic feet equivalent of gas reserves. A smaller operator Several smaller, private and public companies are also pursuing Woodford Shale pay. One is OTC Bulletin Board-listed Cygnus Oil & Gas (formerly known as Touchstone USA). The Houston-based independent is helmed by two seasoned executives: president and chief executive Roger Abel, who is a career veteran of Conoco and Occidental Petroleum, and Pat Oenbring, newly appointed chief operations officer and formerly head of Oxy Permian. Cygnus is undergoing a transformation under their watch, changing its name recently, changing its board membership and management team. Abel joined the company in August 2005. Now it is also moving away from high-risk, expensive exploration wells that it farmed into, toward resource plays such as the Woodford Shale that will allow the small company to grow more steadily without having to raise big amounts of equity as often. In April, Cygnus closed a $20.2-million private placement. "It's never been my belief that you can farm-in your way to greatness. You have to take your ideas and lease them up," says Abel, who used to be the chairman of Conoco exploration and production, Europe. Abel was familiar with the Barnett Shale and saw that it was spilling over into the Arkoma Basin with Southwestern Energy's play just across the Ozark Uplift from Oklahoma. Last August, he began leasing in Oklahoma and also picked up some leases in Woodruff County, Arkansas. He formed a joint venture with Paradigm Geophysical to get a substantial amount of 2-D and 3-D seismic data to start generating prospects. "What (Cygnus) needs is great prospects and lower risk-I'm not saying the shale is a slam dunk. I know it's a highly technical play and you have to pay attention to the details on these completions." To imply Cygnus is paying more attention to one shale over another isn't accurate. Abel says, "The company operates in the Oklahoma shale but has more acreage exposure in the Fayetteville Shale, where we have one rig drilling a well every 25 days or so. But we have to pay equal attention to both plays, as they are equally important." At press time, Cygnus had drilled and slickwater-fraced two wells in the Caney Shale above the Woodford, in McIntosh County just north of Pittsburg County, and it was cleaning them up prior to testing. Its 50% joint-venture partner is privately held Austex Production Co. "The oil business is a challenge every time you turn around," Abel says. "The biggest challenge in these shale plays is to manage the development in a very cost-efficient manner. A lot of people are enamored with the success so far, but it's still a shale gas and a highly statistical play. You get a lot of variety and wells that are less than average. But we'd like to drill four more wells in Oklahoma this year for evaluation."