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Scoop-Stack Playbook 2017

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SCOOP/STACK: TECHNOLOGY 32 | September 2017 | Chips ride the Stack for Chaparral Chaparral Energy is in the throes of transforming itself into a pure-play Stack company with more than 110,000 net acres located primarily in the oil window of Canadian, Kingfisher and Garfield counties. Part of that transformation includes the marketing of its EOR assets in the Oklahoma and Texas Panhandle region and its CO 2 flood project in Oklahoma's Osage County, and investing those gains back into its Stack asset development plans. The data room for its EOR assets opened in June and bids were due in July. The company filed for bankruptcy protection in May 2016—a victim of prolonged weakness in oil and gas prices. The com- pany emerged from bankruptcy this past March. "Chaparral has more than 110,000 net acres in the Stack but due to our Chapter 11 process and our constrained balance sheet the last couple of years we have not been able to fully develop those assets," said Chaparral CEO Earl Reynolds. "Our Stack development is a true evolution of our com- pany, but in some areas within the play we're still in a de-risking mode, testing zones and well spacing patterns. Overall, we feel extremely confident about our frack designs relative to the rocks across our Stack position. We're just beginning to realize the full potential of our outstanding position." In the Stack the company is employing horizontal drilling and the typical fracture technology seen in other basins but contin- ues to experiment with higher sand concen- trations and tighter spacings. "We've been using diversion fairly effec- tively on all of our completions in the past 12 to18 months," Reynolds said. "We have tested packers systems, slotted designs and plug-and-perf cemented liners depending on where we are in the basin. We'll continue to do some testing as we de-risk acreage in Garfield County and the Merge, but overall we feel like we have a solid understanding of the rock and corresponding frack designs, especially in the heart of our Kingfisher and Canadian County acreage." Chaparral's emphasis on cost savings is also continuing to pay off, as it consistently records some of the lowest operating costs in the play. As part of its effort to maintain a low-cost structure, the company completed a dual well pad study in the region in 2016 to ensure it continues to capture the best possible rates of return for its Stack investment. "We have seen a variety of systems used through- out the Stack, so in 2016 we completed five dual well pads to help us determine the most econom- ical approach," said Scott Van Sickle, drilling and completions manager for Chaparral. "Each of the pads had one openhole multistage system and one suspended cemented liner system. We found that the total EURs were virtually identical isolation to isolation, but our rate of return on the openhole multistage systems was close to 50% higher due to the capex reductions and time-value we realized. As a result, we've moved to a standard openhole mul- tistage approach in our current most active area, while we continue to experiment with increased stage count and diversion-cycle stimulation tech- niques as well as general isolation experiments in our other areas of activity." Taking a hard look at costs and rates of return seems to be paying off for Chaparral as it continues to take advantage of pad drilling opportunities. In 2016 its average well cost for a 1-mile lateral in the Meramec was one of the lowest in the industry at about $3.3 million. Drilling nears production on a Chaparral lease in Oklahoma. (Photo courtesy of Chaparral Energy)

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