QEP Resources Increases Permian Position & Exhausts Almost 50% of Budget

QEP Resources Increases Permian Position & Exhausts Almost 50% of Budget

QEP Resources (NYSE: QEP) is an independent operator targeting crude oil and liquids rich gas plays in the United States. The company focuses in the Williston, Permian, Pinedale and Uinta basins and plans on spending $450 to $500 million this year excluding acquisitions and exploratory drilling. QEP is currently running three rigs, one each in the Williston, Permian and Pinedale basins with the option to add a fourth in late 2016.

The chart below shows QEP versus peer operators comparing the operators first quarter CAPEX spend and total debt. QEP has spent almost half of the planed 2016 capex during the first quarter and continues to have large debt load having the second highest debt to equity ratio only behind SM Energy.

peer group metricsSource: Energent Group

High Density Infill Program Continues in the Williston

During the first quarter of 2016 QEP completed 17 wells in the South Antelope area of the Williston Basin along with four additional wells targeting the Three Forks formation. The high density infill pilot has shown strong results verses original completion design.

williston high density infill chartSource: QEP Resources Investor Presentation

QEP has been testing 400’ and 600’ well spacing in the first and second bench of the Three Forks formation. The new completion design consists of 48 to 51 stages and ~10 million lbs. of proppant per well. The first five well pad has which was completed in the second quarter of 2015 has been producing an average of over 217 MBoe during the first 270 days. The company’s infill program has the potential for ~400 locations in the South Antelope area targeting the Middle Bakken and Three Forks formations.

Minimal Activity in the Pinedale and Uinta Basins

During the first quarter of 2016 QEP Resources had zero completions in the Pinedale basin. The company however had 8 gross operated completions in the Uinta basin, all on one pad. All eight wells were directionally drilled vertical wells achieving a combined peak 24 hour IP rate of 29.1 MMcfe/d.

Adding to Inventory in the Permian

QEP announced the acquisition of 9,400 net acres in Martin County for $600 million in cash earlier this week. This is a step in the transition to oil focused operations. The acquisition has added acreage to their core position only 10 miles east of current operations in the basin. With the acreage QEP gained the company also acquired 96 vertical wells which were on the properties having about 1,400 Boe/d of production.

Permian MapSource: QEP Resources Investor Presentation

This acquisition has the potential of adding 430 horizontal drilling locations to the company’s inventory over Wolfcamp A, Wolfcamp B, Middle Spraberry and Spraberry Shale. There is also potential for shallower and deeper locations in the Leonard Shale and Wolfcamp D.

 

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