Talk has turned to doing more exploration in the Permian Basin in the past two years, a change from the usual acquire-and-exploit business model so prevalent there, speakers said at the Executive Oil Conference in Midland, sponsored by Petroleum Strategies Inc. High oil and gas prices are creating new opportunities in the West Texas region, they said. Permian operators are focusing on bypassed pays such as the Lower Clearfork and on deeper gas zones such as the Siluro-Devonian. Most are 3-D-driven plays in tight sands. "When we were doing all acquisitions, we didn't have time to explore. But I did some exploration in time and it turned out to generate our best return," Tim Dunn, chief executive of privately held CrownQuest Operating LLC, said in an operator roundtable discussion. Dunn was backed initially by GE Capital after he left a large public independent in 1995 to start his own firm. In July 2004, CrownQuest sold $345 million of assets to Whiting Petroleum. The deal included 250 billion cubic feet equivalent of proved reserves, all in West Texas and New Mexico. "I like the idea of selling assets but not the whole company. That way I keep my team together," Dunn said. Doug Roper, Permian Basin manager for Continental Land & Fur Co.'s Midland office, studied data from 340 Permian Basin prospects his company evaluated between 2000 and 2004. The data show that the top plays are the Morrow, with average reserves per well of 2.1 billion cubic feet equivalent; the Siluro-Devonian, which is found in one- or two-well fields and yields average reserves per well of 1.4 billion cubic feet equivalent; and the Permian Wolfcamp. This tight rock is economic with today's high gas prices. Average reserves per well are 1 billion cubic feet equivalent. Although companies may not drill nearly as many wildcats as they do development wells, a successful wildcat often leads to a lot of subsequent activity. "In 2000, we drilled five exploratory wells and only one was successful," said Bruce Brady, president of Great Western Drilling Co. "But from that well we drilled 33 development wells keyed off it." Since 2000, the private company has drilled 10 successful exploratory wells and 30 dry holes-but went on to drill 64 development wells off the successes, he said.

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