Despite increased M&A activity around its Uinta Basin position, Scout Energy Partners aims to get deeper in Utah’s emerging oil play.
“We think there’s potential to grow still,” said Juan Nevarez, Scout’s executive vice president, during Hart Energy’s Executive Oil Conference & Expo in Midland, Texas.
Dallas-based Scout is heaviest in the Hugoton Field, which spans across the Texas and Oklahoma panhandles into southwestern Kansas. But the company expanded into the Uinta in mid-2022 by acquiring a property from Ovintiv.
The Ovintiv asset was a waterflood in the Monument Butte Field, southeast of Duchesne, Utah. The property included 90,000 net acres and around 3,000 gross vertical wells, most of which targeted the Green River Formation.
Since taking ownership of the waterflood asset, Scout has worked to test and develop the horizontal potential of its Uinta acreage, Nevarez said.
After closing the Ovintiv deal, Scout followed on with a farm-out that allowed Scout to delineate horizontal locations without risking much capital, he said.
Scout also added acreage through a swap with fellow Utah producer Uinta Wax Operating LLC.
“We also had made a deal with Uinta Wax where they took our deep gas position and we acquired additional acreage from them,” Nevarez said.
Asking prices for Uinta assets have gone up as M&A activity hit Utah over the past year.
This summer, SM Energy and non-operating partner Northern Oil and Gas (NOG) acquired Uinta operator XCL Resources for a combined $2.6 billion. SM acquired an 80% undivided interest in XCL’s assets for $2.1 billion, while NOG picked up a 20% non-operated stake.
SM and NOG picked up XCL’s assets for around $40,000/flowing boe this summer, according to Truist Securities data; Oil was trading at around $82/bbl at the time.
And in November, Ovintiv sold its Uinta assets to private producer FourPoint Resources for around $54,000/flowing boe; Oil was trading around $69/bbl, per Truist data.
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Untapped zones
Scout also sees opportunity to extend its Uinta runway by testing and delineating less popular landing zones underground.
Most of the horizontal development happening in the Uinta today is targeting the Uteland Butte interval.
“We think there’s opportunity to possibly go into the Castle Peak and Wasatch,” Nevarez said.
A few operators are already testing the Castle Peak bench, which overlies the Uteland Butte, and the underlying Wasatch bench with stimulated laterals. Drillers are also landing laterals in the shallower Douglas Creek.
SM Energy has identified 17 layers of stacked pay on the Uinta asset it acquired from XCL Resources.
Scout is working to optimize well designs in the Uinta Basin, but the company is generally going with 1,200 ft to 1,300 ft spacing, Nevarez said.
“There are some operators that tested smaller spacing, and that didn’t work out,” he said.
“The development that we’re going to be doing in the southern position is going to be within that spacing.”
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