Newly minted US independent Energen reported strong results from its first two non-operated wells in the emerging Mancos tight oil play in the San Juan basin in New Mexico and said that the economics of oil development there could eventually rival those of the Permian basin.
Energen’s first two wells, which were operated by fellow independent WPX, came on at 24-hour rates of 914 barrels of oil equivalent per day (78% oil) and 1155 boepd (62% oil).
The wells logged 20-day average production rates of 766 boepd and 752 boepd, respectively.
The company said those initial results indicate the play may be able to compete for capital with its prolific Permian basin properties in the future.
“We still want to see how the next two wells perform but are very encouraged by our on-going analysis of these first two wells and increasingly optimistic that Energen could well have a viable, horizontal oil play in the San Juan Basin,” Energen chief executive James McManus said when announcing the results.
"We likely will deploy a drilling rig in the San Juan Basin in 2015 to begin testing our approximately 75,000 net acres with potential in the oil window of the Mancos formation.”
In the Permian, Energen brought on an exploration well tapping the Wolfcamp B zone in Ward County in the Delaware sub-basin of the Permian at a 24-hour rate of about 1900 boepd (78% oil).
Energen also received approval from Alabama energy regulators for the previously announced sale of its Alagasco natural gas distribution business to The Laclede Group in a deal valued at $1.6 billion that will allow the company to focus entirely on its upstream oil and gas business.
Energen plans to use the cash to fund its drilling in the Permian and San Juan basins.