Oklahoma's SCOOP/STACK can compete with bigger shale plays, Bernstein says

By Mark Passwaters  Tuesday, March 22, 2016 8:50 AM ET

While not as large or prolific as the Permian Basin or Bakken Shale, the core areas of Oklahoma's SCOOP and STACK plays can provide positive returns for producers, according to a Sanford C. Bernstein & Co. LLC report.

The plays, which cover about 1 million acres in central and south-central Oklahoma, are home to the Woodford Shale and the Mississippian Lime, among other drilling targets.

"Relative to other resource plays (Permian, Bakken, Eagle Ford), the play is less extensive," Bernstein said. "However, the play (certainly tier 1 acreage) competes in the same part of the cost curve with the best resource plays for capital."

According to the study, Continental Resources Inc., Devon Energy Corp., Newfield Exploration Co. and Cimarex Energy Co have at least 100,000 acres in the core counties of the play, with Newfield and Continental drilling the best wells to date. The South Central Oklahoma Oil Province, or SCOOP, has a large number of prolific gas wells, though some productive oil wells also exist. The Sooner Trend Anadarko Canadian and Kingfisher, or STACK, north of the SCOOP, has a core area that stretches across three counties.

Bernstein noted that several companies, including Newfield (81%), Continental (50%) and Cimarex (45%), have directed large portions of their 2016 capital expenditures budgets toward the SCOOP/STACK. If the producers are in the right spots, Bernstein said, the investments are smart ones.

"Tier 1 SCOOP STACK is the best use of capital for Newfield and Continental (they have the best wells in the play and it commands the majority of their capex) and competitive for [Cimarex] and [Devon] (they have average wells to date in SCOOP STACK and the opportunity doesn't pull capital away from the Permian or Eagle Ford)," Bernstein said. "For [Marathon Oil Corp.] and [Apache Corp.] the wells are slightly above average but not sufficiently so to displace Permian, Eagle Ford or Bakken capital."