American Oil and Gas Reporter - January 2012 - 53

Oil & Gas Shales
Murchison Oil & Gas has transitioned from drilling
Q:primarily
vertical natural gas wells in the Permian Basin
to tight oil horizontal wells to "hook up" targets in the Upper
Wolfcamp/Lower Abo horizons. What are the general design
parameters and lateral lengths for these wells? How are they
completed? How has your company moved up the learning curve
in applying horizontal drilling technology to maximize per-well
recovery rates and economics? What are the biggest operational
issues and risk factors in drilling and completing these wells?
We knew when we developed our Dog Canyon Morrow
acreage that it appeared to have Abo/Wolfcamp potential behind pipe. Several years earlier, the same zone produced gas in
horizontal wells north of Artesia, N.M., but at that time, development had not extended significantly downdip to the oil leg.
As hydraulic fracturing technology and completion procedures improved, it became apparent the zone warranted development. Using open-hole packers and 10-15 stage fracs in
4,000-foot laterals, these wells proved to be very attractive economically. It also became apparent to us that using geosteering
to keep the bit in the pay zone was critical to achieving maximum initial productivity rates, and increased estimated ultimate recoveries. In our opinion, measurement-while-drilling
porosity tools as well as gamma ray response are extremely
helpful to geosteering.
By implementing technology derived from shale plays, we
can connect a series of limited reservoirs with a single horizontal well bore. We are thereby able to improve production and
ultimate recoveries materially, while reducing our risk significantly. Utilizing that approach, we have been able to achieve
in excess of 1,000 bbl/d of oil in areas where per-well IP oil
rates of 50 bbl/d would have amounted to bragging rights from
a vertical well only a few short years ago.
What are the biggest challenges for small independents
Q:operating
in the Permian Basin today? How are the
booming activity levels and the entry of larger operators
changing the competitive landscape? What is the bottom-line
impact on your business? Looking to the future, how would you
summarize the opportunity set for small independents, and what
types of exploration, drilling and production opportunities or
plays appear particularly promising?
The biggest hurdles for our industry, for both large and small
players, is to somehow present ourselves to the consuming segment of the economy that oil and gas exploration and development can be conducted in a safe and environmentally acceptable manner. Most of us agree that the United States now
controls an abundant supply of clean and affordable natural
gas. These resources can be developed economically with current technology, and capital is available.
The challenge is to assure consumers that these supplies are
real, dependable and economic. The industry has attempted to
promote the notion that natural gas selling at $3.50 an MMBtu
provides a huge competitive advantage for transportation, compared with oil, as long as the industry can provide natural gas

for less than $8.00 an MMBtu. One would have to think that
the innovative spirit of a free market system such as ours should
provide the incentive to stimulate infrastructure changes to use
that resource. This country was built on the concept of low-cost
energy being used to stimulate economic growth.
The industry is as well positioned to prosper over the next
10-20 years as it ever has been in my 40-year career. We have
built a significant acreage position, which has multiple development opportunities. Our challenge will be to manage development from the financial aspect of accessing adequate capital
and building technical teams of critical personnel who are up
to date on new technology. We will need to incentivize those
people to outperform the competition and to gain access to serviceable drilling rigs, frac spreads and associated equipment.
It would appear that small independents-those of us that do
not have to wait on a Monte Carlo simulation to act-can be
more competitive simply by being quick. On balance, small independents, especially those with innovative and focused management teams, are in a better position to deliver higher growth
rates than larger players.
BRAD FISHER, CARRIZO OIL & GAS INC.

Resource Play Revolution

How do you summarize the bottom-line impact of shale
Q:plays
for U.S. independents? With operations in
conventional onshore Gulf Coast fields, the North Sea, and the
Eagle Ford, Marcellus, Niobrara, Barnett and Utica resource
plays, how would you assess the balance in Carrizo's portfolio
between conventional and unconventional assets, as well as oil
versus gas? How important are unconventional resource plays
to Carrizo's long-term growth objectives?
I cannot speak for all independents, but shale plays have provided Carrizo a platform for predictable and repeatable growth,
and all the obvious business advantages that come with that in
terms of access to the capital and debt markets.
In addition, the similar nature of the plays has allowed Carrizo to set up our land, geological, and geophysical groups and
operations in such a fashion that people, skill sets, equipment
and technology can be transferred seamlessly from one play
area to another. This is important because it gives us great flexibility to react to price or regulatory impacts that may drive our
development strategy.
In terms of the portfolio, we like the acreage distribution we
have with significant exposure to both oil and gas shale plays.
Given the prevailing price environment, we are bearish on gas
and bullish on oil, along with the industry in general. Our stated goal entering 2011 was to better balance our portfolio among
oil and gas production and revenues. Because of our success
in both the Eagle Ford and Niobrara plays, we hit our targeted
2011 exit rate of 5,000 net barrels of oil a day.
Shale plays have been a game changer for Carrizo, and we
JANUARY 2012 53

American Oil and Gas Reporter - January 2012

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