American Oil and Gas Reporter - June 2014 - 122

SpecialReport: Hot Spots: Permian Basin
"These wells have a two-and-a-halfyear payout with a 40 percent rate of return," he maintains. "It is rich gas (1,3001,340 Btu) with a natural gas liquids
component, so they are lucrative on all
fronts."
Approach has reduced its drilling time
to 10-12 days on average, with a record six
days. "Drilling is the cheapest part," Craft
observes. "The cost is in the completion.
We went through a series of 21 to 25 to 33
frac stages, but we came back to an average of 26 stages."
Lowering Water Costs

The average initial 24-hour production rate for Wolfcamp wells Approach Resources completed in first quarter 2014 was 743 barrels of oil equivalent. The company is completing
7,500-foot laterals with an average of 26 fracture stages. Estimated ultimate recoveries
for Approach's Wolfcamp wells are 450,000 boe, of which 70-80 percent are liquids.

uation of the Wolfcamp Shale in 2009 and
launching a horizontal drilling program in
2011. Earlier this year, Approach completed its 100th horizontal well.
By the time it had completed its first
three horizontal wells, he says Approach
basically had perfected its hydraulic fracturing technique, going from 5,000-foot
laterals to 7,500 feet.
"The next question was how to get our
drilling costs down," Craft continues.
Initial costs were $7.5 million a well.
He says Approach has lowered that to $5.4
million-$5.5 million.
Craft says the legacy Canyon wells
have slow decline rates. Approach also has
a vertical inventory targeting the Wolffork,
which is a commingling of the Wolfcamp
and Clear Fork zones.
Estimated ultimate recovery for the
Wolfcamp horizontal wells Approach has
drilled is 70-80 percent liquids. EURs for
individual Wolfcamp wells are 450,000
barrels of oil equivalent, according to Craft.
"The Wolfcamp has an A, B and C
bench," he points out. "We were the first
to commercialize all three benches. We
started in the B and then targeted the A.
In 2011, we drilled our first well in the C
bench. We have gone from a pilot into full
development of the C bench."
Craft says Approach is drilling two to
three wells off each pad.
"We are fine-tuning the lateral spacing,"

he adds. "By the end of the year, we should
be in full development. We believe we can
drill six wells per bench with 660-foot
spacing between each lateral. With the
thickness of the Wolfcamp (1,000-1,200
feet), there is no way one lateral can drain
the hydrocarbon column. We are lucky to
drain 300-350 feet with each lateral, so it
will require three laterals to drain it."
Wolfcamp Results
According to the company's first-quarter earnings report, Approach drilled 16
horizontal wells and completed 19 in
first quarter 2014: one well targeting the
Wolfcamp A, 13 wells targeting the Wolfcamp B, and five wells targeting the
Wolfcamp C. The average initial 24-hour
rate for wells completed in the first quarter was 743 boe (73 percent oil). Completion activity included four two-well pads
in Project Pangea, targeting Wolfcamp B
and Wolfcamp C; and one two-well pad in
Pangea West, targeting the Wolfcamp A
and Wolfcamp C.
"We believe these results largely derisk
the company's stacked wellbore development outlook," Craft contends.
Notable results from the first quarter include the Baker B255HB and the Baker
B259HC, which are stacked B/C completions in Central Project Pangea and produced at an average initial rate of 842 boe
a day (79 percent oil).

122 THE AMERICAN OIL & GAS REPORTER

Craft says Approach has spent $80 million building infrastructure to lower its cost
of handling water.
"We lay six lines to each well," he offers:
* A gas line;
* An eight-inch, high-pressure gas line
for injection;
* An eight-inch oil-gathering line;
and
* Three water lines: one to take flowback water to be treated and two lines to
take free water and high chloride water to
the well.
"We believe in environmentally responsible water management practices, which
have the added benefit of also being costconscious," Craft reflects.
Because most of its Project Pangea
acreage is contiguous, Craft says Approach is able to use two, big recycling stations to clean the water, kill the bacteria
in it, and recirculate the water back into
the system. He says most of the Santa Rosa
water wells the company has drilled are
high in sulfate and iron, so the water has
to be treated.
"Our goal is to use 30 to 100 percent
recycled water," Craft states. "We don't
want to use any potable water. It is basically a closed loop system."
Obviously, the drought has brought the
water issue to the forefront, but Craft says
its water treatment system saves Approach about $1 million a well, which
means it paid for itself in the first 72 wells.
He points out that the company also is
using a centralized gas lift system, and will
switch to rod pumps after about five
years.
"We recycle the gas from the Wolf-

American Oil and Gas Reporter - June 2014

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