There are more than just earthquakes buzzing in Oklahoma. The South Central Oklahoma Oil Province and Sooner Trend Anadarko Basin Canadian and Kingfisher counties (SCOOP and STACK) are becoming some of the most highly sought after shale assets in North America. Along with the Permian, the newly developed acreage in Oklahoma seems to provide some of the best economics of the North American oil plays.
Extensions of the Cana Woodford, the SCOOP and STACK have turned interest in Oklahoma away from pure natural gas towards liquids potential. Operators including Devon, Newfield and Marathon have focused efforts on drilling the liquids rich plays since the downturn in natural gas prices in 2008. According to Devon, certain STACK assets reward operators with 20-30%+ IRR, second highest behind prolific core Permian plays. Operators have also noted that the STACK has little to no produced water. This along with high yields from horizontal redevelopment and modern stimulations have created a buzz around the basin’s future potential.
During 2015, the STACK became one of the few unconventional formations in North America to see a year over year increase in rig count. However, increased operator interest in Oklahoma has coincided with renewed speculation that fracking may be connected to the 5.6 magnitude earthquake that recently shook the state. While the precise connection between fracking and earthquakes remains unproven, specialists believe that the injection of wastewater from disposal wells could increase the likelihood of earthquakes in the area. The environmental concern surrounding the SCOOP and STACK could yet play an important role in the basins success.
With one of the lowest breakevens of the North American shale plays – some areas reportedly economical under $40/ bbl. WTI – the question surrounding potential environmental legislation remains. Whether or not operators are able to overcome these concerns will play an important role in US production over the next decade.
Mitchell Zlotnik, Douglas-Westwood Houston
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