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First Significant Powder River Basin Horizontal Oil Discovery

By Claudia Strasbaugh

Chesapeake Exploration of Oklahoma is reportedly generating 200 to 300 barrels of oil per day from a horizontal well drilled to the Frontier formation in the Powder River Basin. There, the Wagonhound 23-1H well is the first significant horizontal producer in the Powder River Basin Frontier formation.

The well offsets a vertical well that has cumulative production in excess of 280,000 barrels of oil. Horizontal wells often make several times the cumulative production compared to vertical wells, thus Wagonhound 23-1H represents a potentially significant find. Costs for the well are estimated at around $8,000,000.

Chesapeake initially came to the the deal through Morton Production Company LLC, (Morton) of Douglas Wyoming. Morton partnered with Prolific Petroleum, LLC of Greenwood Village, Colorado, and Taylor Oil Properties through its subsidiary RGPG Investments, LLC of Littleton, Colorado by securing an initial 3100 acre lease from Wagonhound Land & Livestock Company, LLC.

Taylor and Prolific originated the idea of drilling the Frontier formation utilizing horizontal technology combined with state of the art frac techniques. Still, success didn’t come easily, according to Taylor, "Frontier rocks are apparently tough to drill."

Chesapeake has reported attaining more than 200,000 acres in the Powder River Basin. Recently Chesapeake bought out American Oil and Gas' (AEZ) interest in acreage surrounding the well. Chesapeake has permitted several other horizontal tests in the region.

Randall Taylor of Taylor Oil Properties confirmed the discovery. "We are very pleased with the initial production and how the well is cleaning up. Production continues to increase. Partner and geologist on the project, Terry Ganey of Prolific Petroleum did a great job of identifying the opportunity. It appears Chesapeake has done a very nice job in the completion. The exciting thing is that we have room for many additional wells on our acreage, having acquired additional interests alongside Chesapeake."

Now there is every indication that Frontier formation is an oil target. Powder River may become the next big oil find among the Rocky Mountains.

The use of horizontal drilling should lower finding costs which may well be necessary as Wyoming sweet crude (unrefined oil with a low sulfur content) is currently selling for $56 a barrel, $14.00 below the current $70 NYMEX market price.