Devon Energy Corp.'s (NYSE: DVN) risked drilling inventory in the Delaware Basin has increased by 20% following a successful Leonard Shale stacked spacing test in southeast New Mexico, the company said Dec. 6.
The Oklahoma City company's Thistle spacing pilot tested average 30-day IP rates of 1,800 barrels of oil-equivalent barrels per day (boe/d) per well, of which 75% was light oil. The pilot tested 400-foot vertical spacing between the Leonard Shale “B” and “C” intervals in the southwest corner of Lea County, N.M.
Devon's Leonard downspacing success yields inventory expansion, increasing the company's risked gross locations to 950 (predicted on six wells per section) from previous estimates. This early-stage development play has potential for greater than 1 billion boe of recoverable resource, Devon said.
Mike Kelly, senior analyst with Seaport Global Securities, said Devon's estimates could prove conservative given ongoing downspacing efforts aimed at ultimately testing up to 24 wells per section across the Leonard A, B, and C.
"We like Devon’s expanding high-quality Delaware inventory, which should serve as a material growth driver going forward," Kelly said in a Dec. 7 report.
Kelly also sees additional positive implications from Devon's success for nearby players including Concho Resources Inc. (NYSE: CXO), EOG Resource Inc. (NYSE: EOG), Matador Resources Co. (NYSE: MTDR), Occidental Petroleum Corp. (NYSE: OXY) and WPX Energy Inc. (NYSE: WPX).
The Thistle wells were drilled with 7,000-foot laterals at a cost of about $6 million per well, Devon said.
Overall, Devon has 60,000 net surface acres in the Leonard Shale play, with gross pay ranging up to 1,100 feet and as many as three different landing intervals. Adding up the Leonard leasehold by target landing interval, Devon has exposure to 160,000 net effective acres.
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