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Oklahoma
In Oklahoma, the Trust has approximately 44,700 net undeveloped acres of land, centered in the Grant, Lincoln and Logan Counties. Average production for 2008 from the area was approximately 24 mmcf/d of natural gas and 545 bbl/d of crude oil and NGL. The key producing horizon is the Hunton Group, which is a carbonate rock formation that has been largely overlooked by the industry in areas with high water/hydrocarbon production ratios. Over the last decade, new drilling and production techniques have enabled the profitable development of hydrocarbon production from these areas of the Hunton formation. Extensive dewatering lowers pressure allowing the liberation and mobilization of oil and gas from smaller rock pores. The play is statistical in nature with a variety of well performance characteristics. On average, total gross peak hydrocarbon production rates settle at 150 boe/d per horizontal well within six months after drilling and tie-in and this production consists of NGL-laden natural gas and light sweet oil. Gross proved plus probable reserves are approximately 280,000 boe on average per horizontal well.
The Trust has total proved and probable reserves in Oklahoma of 6,909 mbbl of crude oil and NGLs and 50.3 Bcf of natural gas as of December 31, 2008. Operating costs on these properties averaged $11.42/boe during 2008. At present, the Trust has identified more than 50 drilling locations on these properties.
Enterra exploits this play under a farmout agreement, where our partner pays 100 percent of the costs of drilling and completing each well on Trust lands to earn a 70 percent working interest. All production, however, is operated by Enterra. By the end of 2008, 57 producing wells had been drilled and completed under this agreement. In addition, several saltwater disposal well had been drilled. In 2008 31 wells were drilled resulting in 28 gas wells, one water disposal well and two dry holes. Enterra pays 100 percent of the costs of drilling the required water disposal wells and associated infrastructure, but recovers 100 percent of those costs plus interest over a 3-year period through a capital recovery agreement with our partner.
The Trust has experienced very low finding and development costs in the range of $5 to $8/boe in the three years since 2006. As a result of these low costs and the repeatability of success, Enterra ranks its Oklahoma prospects among the best in its portfolio and among the best in the industry. Future plans include continued aggressive exploitation of this opportunity.