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Canyon Creek’s Essman: SE Okla. play rebounding with ‘Arkoma Stack’

February 15, 2018
Southeast Oklahoma’s Arkoma Basin is rapidly gaining ground on the Stack and SCOOP as one of Oklahoma’s most active production areas.

Luke Essman, president and CEO of Canyon Creek Energy, one of the foremost producers in the Arkoma, laid out the company’s recent history and plans for the future at OIPA’s Wildcatter Wednesday Luncheon in Tulsa on Feb. 14.

Prior to founding Canyon Creek and its predecessor companies, Essman spent 10 years in commercial banking with Bank of Oklahoma and Summit, both operating in Tulsa. He was named a Top 40 Under 40 professional in Oklahoma by Oklahoma Magazine in 2014 and a Top 30 Under 40 by Oil and Gas Investor Magazine in 2016.

“I’m sure everybody in here has a story of the Arkoma,” said Essman, an OIPA board member. “I hope it’s a story of yesteryear drilling vertical dry gas or horizontal Woodford gas.”

Canyon Creek controls 100,000 acres across four counties in Southeast Oklahoma’s Arkoma Basin, where they drilled eight wells in 2017 and intend to drill two horizontal Mayes shale wells and 16 horizontal Woodford shale wells in 2018.

The area where Canyon Creek operates — spreading across parts of Hughes, Coal, Atoka, Pittsburg, McIntosh, Okfuskee and Okmulgee counties — has come to be known as the Arkoma Stack because of its multiple horizontal target formations in the Caney Shale, Mayes Siltstone and Woodford Shale.

The Arkoma Stack has seen activity from Corterra Energy, Antioch Energy, Calyx Energy, Council Oak Resources and Newfield Exploration, and midstream companies Tall Oak and Valiant have announced processing and gathering projects there.

“We’ve seen two operators drill first laterals in the Mayes, with Newfield Exploration and Antioch Energy,” Essman said. “Both of those results are not public yet, but we’re excited about those results. There’s a lot of momentum picking up both on the upstream side and the midstream side to be able to capture the growth of the Arkoma.”

Canyon Creek is set to drill a pair of test wells in the Mayes later in 2018, he said.

Nine private equity backed entities are active in the basin, he said. Hughes County was the most actively leased county in the state in 2017.

“It’s very interesting to be a part of smart companies that are working alongside us to be able to develop in this part of the world,” he said.

Essman said that in January of 2018, Canyon Creek drilled the longest lateral in Arkoma Basin history — an 11,877-foot horizontal in the Woodford.

“The basin really sat still at around a mile for several years. More recently, since we’ve had a re-investment back into the basin, we’ve seen lateral lengths climb,” to a 2017 average of about 8,500 feet.

“That’s pretty fantastic, to see that happening on the east side of the state.”

Canyon Creek has also been successful at increasing efficiencies in proppant and fluids, he said, with their current proppant use below 2014 volumes and gallons per foot of fluid below 2015 volumes, even as proppant and fluid levels in the Anadarko Woodford have climbed.

Efforting to optimize completions has been key to Canyon Creek’s success, he said.

“To pull a completion method off the shelf and try to apply it to multiple reservoirs is the incorrect way to do it,” he said. “All rocks can respond differently. I don’t know that you ever ‘crack the code,’ but it’s the effort that creates success. We can’t take a Cana completion and apply it here, but there are things we can learn from it.”

Essman said the long-lateral bill promoted by the OIPA and passed by the Legislature in 2017 was transformative. Canyon Creek had planned much of their 2017-18 activity not knowing what would happen with that bill, he said.

“Now we have certainty that we can drill in the Miss,” he said.

“Historically, we would drill the Woodford and we’d pool common source above and below — we’d hold the Miss to the Hunton, for example, but no one really cared about that because most of it wasn’t productive. But now, being that the Miss was deemed not a source of supply with the Woodford, it could be severed in leases, it could be severed in pooling.

“Now that we have the confidence that we can extend out into the Miss, we certainly do have two long-lateral plays, and the Caney shale as well, which we’re not actively exploring right now. Great work done by the OIPA.”

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