Another hot play in the Permian Basin?

Oil & Gas 360:
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Yuma announced its entry into the Permian basin in a joint development agreement with two private companies in April. This agreement covered an area encompassing 33,280 acres of the San Andres play in the northern Permian, in Yoakum County.

To develop this play Yuma has acquired 1,985 net acres in the area and intends to spud its first well this year. Additional acreage acquisitions in the area are in the works.

Yuma reports that several operators are already active near the company’s acreage. The historic results from these wells suggest that one- mile laterals typically produce 300 MBO EURs and 300 BOPD IPs, while 1.5 mile laterals produce 500 MBO EURs and 330 BOPD IPs.

These estimates include all previous wells in the area, including early wells when ideal targets and processes were not established. With this in mind, new wells in the area are likely to exceed these numbers, as zones and frac designs are better understood.

Unlike in the Delaware basin, wells in the San Andres typically cost $1.8 million to $2.5 million.
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“The San Andres play is probably one of the better kept secrets in the Permian right now,” McKinney told Oil & Gas 360®. “The capital cost is significantly less [on San Andres wells].

“The ratio of the producing rates and reserves, and this is my opinion and I think that in the next year it will be proven to be this way, I think you’ll find that the San Andres play itself will ultimately provide better economics in terms of rate of capital employed or rate or return or whatever parameter you want to use.

“It’s a newly-emerging play, there have been quite a few wells in the Yoakum County area and the area just west of Yoakum, in Lea County in New Mexico. There’s been over 75 wells drilled in that area and the economics are very robust.
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The activity in several formations in the Permian Basin continues to look productive.  BTW, Yoakum County is no where near Yoakum. Texas which is much closer to the Eagle Ford formation in South Texas.

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