American Oil and Gas Reporter - April 2016 - 70

SpecialReport: Drilling Technology
"We get a lot more penetration. It keeps
the pressure closer to the wellbore, and
that pressure is trapped, so we get larger
fractures."
Spacing considerations require drilling
the vertical wells on individual pads,
Robinson says, but companies still are
able to zipper frac two or three wells at a
time by "having a lot of iron on the
ground."
"It is a lot more work, but you have to
do what you have to do," he adds.
A good Illinois Basin well may yield
40-50 bbl/d initial production, Robinson
estimates, but he says a lot of wells come
in at 10-15 bbl/d. Within a couple years,
many are deemed stripper wells as their
production slips below 2 bbl/d, he adds.
Illinois Basin drilling activity has
nearly halted, Robinson characterizes,
but he predicts things will awaken in the
second half of 2016 as crude oil prices
start to creep up. "We are almost dead in
the water," he admits. "The spread between our price and West Texas Intermediate is about $7.50, so when WTI
dropped to $26 in February, our price

70 THE AMERICAN OIL & GAS REPORTER

was around $19. There was only one rotary rig working (as of mid-March) in
the Illinois Basin."
Nevertheless, he continues, the basin's
producers are a frugal bunch who do not
need $80-$90 oil prices. "If it gets back
to $40 or $50 a barrel, we will get busy,"
Robinson promises. "Overhead here is
small. Our wells can be drilled for
$250,000. We hope prices are on the way
back up. We already have clients that
plan to drill projects in the second half of
2016."
Still Moving Forward
Gunn Oil Company in Wichita Falls,
Tx., reports plans to drill six vertical
wells starting this spring. Two are in
Fisher County, Tx., on the Permian Basin's
Eastern Shelf, where President Don Hupp
says the company will drill to maintain
leases. He adds that the other wells Gunn
Oil plans to drill will be strictly exploration
wells on prospects near the Texas Panhandle.
"During 2011, we were in a competitive
land play for the Cline Shale in Fisher

County, which turned out not to be any
good," Hupp states.
He goes on to say that in order for the
company to recover some of its land and
lease costs, Gunn Oil has chosen to shoot
a large amount of 3-D seismic that ultimately has helped identify and locate
many exploratory, conventional opportunities.
According to Hupp, Gunn Oil plans
to drill its four wildcat prospects to about
4,000 feet and stimulate them with acid
only. If any prove successful, he predicts,
the company probably will continue
drilling the rest of the year, adding that
he feels these wells can be drilled fairly
cheaply at today's prices. Hupp comments
that producing successful wells can be
delayed as long as the company has term
on its leases, or Gunn Oil can start producing them sooner if oil prices recover.
Although weak prices make for challenging times, Hupp reassures that the
company will carry on its limited drilling
program in an effort to maintain cash
flow. "Besides, Gunn Oil is self-funded
with no debt," Hupp proclaims.

American Oil and Gas Reporter - April 2016

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