Oklahoma's SCOOP and STACK plays – strong economics and leasing activity, but much left to resolve

With the oil price seemingly stuck at a WTI price cap of $50/bbl, E&P operators are challenged to find new opportunities to extend drilling inventories which generate economic volumes.

Valuations of Permian acreage remain high, which further limits opportunity to enter and add value. Overall, few plays present themselves as attractive for operators. However, the SCOOP (South Central Oklahoma Oil Province)and STACK (Sooner Trend, Anadarko (Basin), Canadian (and) Kingfisher (counties)) plays in central Oklahoma meet the criteria of promising economics, comparatively low acreage prices, and the potential for being the next growth wedge for operators.

These plays are new to the unconventionals game. So while they offer interesting potential, there is also risk associated with delineating the plays, and the ever-present possibility of the acquisition never paying for itself. However, operators have been successful in generating economic volumes through various well completions and configurations.

Our view is that despite the plays being, relatively speaking, in their infancy, their potentially positive economics should be sufficient to sustain interest through the mid-term.

Lease activity in the SCOOP and STACK plays remains strong; stronger, in fact, than in even the Permian Basin. This is partly driven by the higher acreage prices in the Permian Basin, but is also driven by the smaller average acreage positions. The overall trend in leasing is expected to remain high as many acreage holdings are set to expire in the upcoming 18 months.

The IHS outlook for the upcoming central Oklahoma plays is optimistic, though as always, we caution that the play still has substantial delineation and de-risking left. But, to date, results for these plays are trending in the right direction.

For more detailed analysis of the SCOOP and STACK, please view our on-demand webcast. For more information on the services demonstrated, please contact ann.forte@ihsmarkit.com.

By IHS Energy Blogger
Posted on July 18, 2016

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.