The higher-intensity completions are costing an average of 35% fewer dollars spent per barrel of oil equivalent of output, Crescent Energy told investors and analysts on March 5.
Nissa
Darbonne
Oil and Gas Investor
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Crescent Energy is doubling down on proppant in the Uinta Basin, making 50% bigger wells for 35% fewer bucks per boe of output, the company reported March 5.
“When we acquired this position [in 2022], the only horizontal development on the assets utilized a legacy, smaller completion design with roughly 1,500 pounds of proppant per foot,” David Rockecharlie, Crescent CEO, said in an earnings call.
New completions use 3,000 lbs per foot. “The early results from our updated design, which we implemented over the last nine months, are significantly better than the previous design.”
Crescent’s operating unit, Javelin Energy Partners Management, is led by John Jacobi, formerly of the Haynesville’s early days while with Exco Resources and most recently founder of Haynesville operator Covey Park Energy, which sold in 2019 to Comstock Resources for $2.2 billion.
Javelin produced 655,456 bbl with 2.1 Bcf of solution gas in Utah in November, according to the Utah Department of Natural Resources’ (DNR) well files, averaging 21,848 bbl/d from 435 active wells.
The rate was similar to production a year earlier, according to the DNR.
The wells
Among Javelin’s latest wells, Robinson 5-19-20-C4-6H in Altamont Field in Duchesne County, Utah, was brought online in November. It produced 21,131 bbl and 23,485 Mcf in 31 days in December, its first full month of production, according to the well file.
The adjacent Robinson #4H made 20,691 bbl and 23,028 Mcf. The neighboring Robinson 4-19-20-C4-2H produced 45,719 bbl and 52,386 Mcf.
Three additional wells are planned for the unit, according to DNR records.
Also in Altamont Field, the Park City 12-6-5-C4 series was brought online this past spring. The #8H produced 58,334 bbl and 57,958 Mcf its first 205 days online.
The #6H made 51,249 bbl and 65,692 Mcf in its first 200 days; the #7H produced 140,723 bbl and 181,003 Mcf in 205 days.
Combined production of 250,306 bbl averaged 1,231 bbl/d for the unit over an average of 203 days.
The nearby Park City 13-6-5-C4 #9H produced 115,003 bbl and 130,064 Mcf in its first 205 days.
Also, Park City 5-6-5-C4 #3H made 136,322 bbl and 179 MMcf in its first 200 days; the #4H, 67,717 bbl and 84 MMcf; and the #5H, 130,012 bbl and 172 MMcf.
Uinta Basin development has historically been from the Uteland Butte reservoir in the Lower Green River, Rockecharlie said.
But some of Crescent’s neighbors are de-risking additional production at other depths, including in the overlying Douglas Creek and Castle Peak as well as in the underlying Wasatch.
“We see significant runway and upside development potential on our acreage in incremental formations beyond the Uteland Butte, which was the primary source of production when we underwrote and acquired the assets,” he told analysts and investors.
Crescent’s Utah portfolio is in Duchesne and Uintah counties, primarily in Altamont and Bluebell fields. Neighbors include Altamont Energy, CH4 Finley, XCL Resources, Ovintiv Inc. and Scout Energy Management.
On March 5, Rockecharlie said that in both of its oily plays—the Uinta Basin and the Eagle Ford—"we're drilling wells faster. On the completion side, we're pumping jobs quicker and more effectively.”
But the completion design isn’t novel, he added. “We’re just bringing what I'll call the latest technology to assets that have not been optimized and we're seeing that in both the drilling and completion sides.”
The Utah backstory
Crescent Energy acquired the Utah property, consisting mostly of former EP Energy wells and leasehold, in March 2022 from EnCap Investments-backed Verdun Oil after the Federal Trade Commission, citing antitrust concerns, forced a sale.
EnCap-backed XCL Resources’ acquisition of EP Energy would have eliminated “head-to-head competition” between two of four operators in the basin, the FTC contended. The basin’s waxy crude production supplies Salt Lake City refiners optimized for that type of feedstock.
In the deal, Crescent acquired 30,000 boe/d (65% oil) from more than 400 active vertical and horizontal wells with 145,000 contiguous net acres (83% average working interest) for $690 million cash. The transaction closed in March 2022.
An analyst asked in the earnings call if Crescent’s success in Utah has the company interested in acquiring more property there.
Clay Rynd, Crescent executive vice president, investments, noted how Crescent came to own the Utah position in the first place. “It’s a place we're paying attention to, as you'd expect. But there are obviously unique dynamics around it as well that we're cognizant of.
“So it’s an area we'd love to continue to invest behind, while being prudent in terms of how we think about it.”
Growth outlook
Asked about Crescent’s outlook for production growth from the basin, Rockecharlie said he expects “activity continuing to accelerate as the resource expands.”
“So the way we think about it is there's more production and longer reserve life in that basin than there's ever been. And it looks like that's going to continue,” he said.
Neighboring E&Ps are more active than Crescent right now, he added, and “others' growth will outpace ours because of a different business philosophy and strategy.”
“But as Clay mentioned, we're going to get to see a lot of development around us and also participate in it. And I think that's going to be great for us.”
Crescent Energy was formed in 2021 from the merger of publicly traded Contango Oil & Gas and privately held Independence Energy put under the management of investment firm KKR’s real estate team.
