Month: April 2017

Today, April 28, 2017, Chaparral Energy (“Chaparral”) released their 2017 strategy. Chaparral also posted an updated Investor Presentation, which contains great details for those interested. In this week’s Oklahoma Operator News we take a brief look at Chaparral’s 2017 strategy.

On March 21, 2017, Chaparral emerged from Chapter 11 bankruptcy protection. They were able to eliminate approximately $100 million of annual interest expense. Chaparral plans to divest their Enhanced Oil Recovery Assets, and have hired CIBC Griffis & Small as an advisor. Chaparral plans to use the proceeds from their divestments to help fund their 2017 strategy.

Chaparral’s primary strategy in 2017 is to transition to a “Premium Pure-Play STACK Company.” Currently, Chaparral has 110,000 acres of STACK assets. This acreage covers the original STACK counties, Canadian and Kingfisher, as well as Blaine, Dewey, Woodward, Major, and Garfield.

 

 

 

 

 

Chaparral’s acreage is primarily located in the normal pressured region. Continental’s record well, the Angus Trust 1-4-33XH, is located in the over pressured region of Blaine county. However, Newfield’s record well, the Burgess 1H-18, is located in the normal pressured region, specifically in 15N-07W, Kingfisher County, OK.

 

 

 

 

The STACK play has been the source for recent Acquisition & Divestment activity. Chaparral’s presentation included a great overview of this activity. As you can see, there have been some significant transactions take place in 2016/2017. Due to the surrounding transactions, Chaparral can easily assign value to their acreage, and provide their investors with concrete evidence.

To date, Chaparral has filed 11 Permits to Drill, covering the counties of Canadian, Garfield, and Kingfisher. Chaparral claims to be the “lowest-cost Meramec Operator” (on a like-for-like basis, one mile laterals).

Chaparral’s CEO, Earl Reynold’s stated that “we are committed to maintaining a strong balance sheet and safely delivering solid repeatable results as we develop and expand our premier STACK position.” Based on the recent well results of other operators in the area, and the $/acre prices obtained by recent sellers, Chaparral appears to be positioning themselves for a strong future. This is great news for the state of Oklahoma whose budget and economy has suffered with the decline of oil and gas activity and layoffs.

Tapstone Energy (“Tapstone”) announced on April 13, 2017, plans to become publicly traded. Tapstone plans to raise up to $100 million in an IPO and trade on the NYSE under the ticker, “TE.” Compared to the other Oklahoma majors, like Continental, Sandridge, Chesapeake, Devon; Tapstone seems to fly under the radar when it comes to Oklahoma industry news and water cooler conversations.

Tapstone was founded by Tom Ward in 2013. Tom is known for his role as the former CEO of Sandridge and co-founder of Chesapeake Energy. Tom Ward also co-founded White Fields in 2000, a non-profit organization that cares for abused and neglected boys who are in the custody of the state of Oklahoma.

On January 1, 2017, Tom Ward stepped down as Tapstone’s CEO, and Steve Dixon, a former Chesapeake Energy executive, took his place.

Tapstone primarily operates in the NW STACK play, and have completed approximately 39 wells, the majority targeting the Mississippian (Meramec and Upper Osage) formation(s). Statewide, Tapstone operates approximately 449 active wells.

From March 2014 to April 2017, Tapstone took approximately 5,000 oil and gas leases; the majority located in Woodward county as illustrated in the map.  During the same time period, Tapstone applied for approximately 52 drilling permits.

The STACK is trending NW into the counties of Custer, Dewey, and Woodward. Tapstone claims to own the largest contiguous leasehold position in the NW STACK. It will be interesting to examine well results of the NW STACK as more operators enter the region; Continental, Newfield, and Devon have some recent activity. If the well results are similar to those being reported in Blaine, then Tapstone is going to be in a very favorable position.