Why the Horizontal Mississippian Is a Great Play

POINT ROBERTS, WA--(Marketwire - August 22, 2011) - Investorideas.com, (www.InvestorIdeas.com), a leader in sector research including oil and gas stocks, provides an inside look at two oil and gas companies' strategies for drilling in the Horizontal Mississippian Play and why lower costs and a high drilling success rate make this a winner for investors. 

Kevin R. White, Senior Vice President, of SandRidge Energy, Inc. (NYSE: SD), and Kim Bradford, President and CEO of Osage Exploration and Development, Inc. (OTCBB: OEDV) share insight into their entrance and participation in the play.

Kim Bradford, President and CEO of Osage Exploration and Development, Inc. (OTCBB: OEDV) recently commented on why his company is focusing on this area and continuing to increase its net acreage. Osage, along with its partners, Slawson Exploration Company, Inc. and U.S. Energy Development Corporation, has now reached 12,000 net mineral acres.

"The Mississippian formation is deposited over the majority of the state of Oklahoma, Kansas, and extends northerly throughout North America. During the origin of the Mississippian formation, the North American plate and the South American plate were converging, which resulted in a unique depositional environment. The real target within the Mississippian formation is the chert facies that was formed during this dynamic depositional event. As a result, Osage sought out areas that exhibited a high percentage of the chert facies in existing well logs.

"After a regional study that encompassed most of Oklahoma and a significant part of Kansas, Osage chose to pursue the formation near the Nemaha Ridge, which was contemporaneously formed during the deposition of the Mississippian strata. The creation of the Nemaha Ridge caused a fracturing of the Mississippian in general and the chert facies in particular that in our view is crucial to the capacity and quality of the reservoir.

"The west side of the Nemaha Ridge is commonly known as the Sooner Trend which has been drilled extensively in the Mississippian and in our opinion is certainly pressure depleted. On the east side of the Nemaha Ridge, there has been considerably less drilling to the Mississippian and correspondingly less depletion, yet due to the percentage of chert and the tectonic dynamic of the Ridge, we feel that this area will perform as well as anywhere else in the play."

Kevin R. White, Senior Vice President of SandRidge Energy, Inc. (NYSE: SD), shared his company insight as to 'What Makes the Horizontal Mississippian a Great Play' in a recent interview with Investorideas.com. SandRidge's strategy, according to its recent investor presentation is to focus on shallow, low cost, conventional plays.

In that light, Kevin White explains their current position, research and history in the Mississippian Formation. 

"The Mississippian is shallow, low cost, and is actually a conventional reservoir rock. We spent about three years studying the play and looked at the thousands of vertical wells drilled into the Mississippian formation over the preceding several decades.

"The company currently has over 900,000 net acres in the Mississippian. The majority of our property was purchased in 2010, with an average cost of $200 an acre. We really made our move in 2010 and increased our acreage from about 100,000 acres to 800,000 acres during the period from March to December 2010.

"Having oil prices at $80 plus during the time we built the largest part of our position, it was an easy decision to see the rates of return would be really good.

"In terms of lower costs, it is a shallow horizon, so you are able to kick off and drill horizontally at about 5500 feet. Since it is true reservoir rock, the formation actually drills faster and easier than other, tighter, resource type rocks. Lastly, because it's reservoir rock, that has real natural porosity and permeability, you don't actually have to be as intrusive with your completion process, so it requires a lot less horse-power to go in and frac these wells than what some of the other plays require. All of that combined: we can use smaller rigs (thousand horse-power rigs), smaller frac fleets (we require about 12,500 horse-power on site), those things just add up to less cost.

"Also, the type of equipment we are using is not in high demand in any of the other high profile, expensive tighter rock plays that are going on in our industry.

"As far as our drilling plans for 2011, our capital plan has us drilling about 140 producers in the Mississippian."

In asking to clarify that the company has never had a dry hole in this play, Mr. White replied, "That is correct. It's not really that unusual in a hydrocarbon charged reservoir. There are going to be a variety of wells; there are going to be some really good wells, average wells and below average wells. It's very large petroleum charged reservoir, so it's not surprising to us. It's a thick package of sands, where we have the majority of our acres in 200 to 600 feet in thickness, so it would be unusual to go in and drill the well and complete it and get nothing out of it."

More about SandRidge Energy, Inc. (NYSE: SD)
http://media.corporate-ir.net/media_files/irol/19/196066/June2011InvestorPresentation.pdf

More about Osage (OTCBB: OEDV)
www.osageexploration.com

Visit the Osage (OTCBB: OEDV) company showcase profile at Investorideas.com
http://www.investorideas.com/CO/OEDV/

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