Newspaper article THE JOURNAL RECORD

Vertical Comeback: Business Returns for Traditional Wells

Newspaper article THE JOURNAL RECORD

Vertical Comeback: Business Returns for Traditional Wells

Article excerpt

HOMINY - While horizontal drilling was the rage in northeast Oklahoma a few years back, Mike Mackey saw his oil-field service business suffer.

Mackey, owner of Osage Wireline Inc., performs a number of services on vertical wells.

"They don't need my services on the horizontal stuff," Mackey said.

However, in the past year business has soared for Osage Wireline as operators northwest and west of Tulsa turn back to vertical drilling.

"This year our business is back up because everybody realized that in our market niche, the horizontal drilling was not working," Mackey said. "So, people have gone back to vertical drilling in northeastern and north-central Oklahoma."

Doug Cowan, co-owner of Tomahawk Acid Services LLC, has seen activity seesaw in the Hominy area.

"July was down, but August was decent," he said. "And, this month started out decent."

There has been a downturn in horizontal drilling in the area surrounding Osage County, Cowan said.

"It has already fallen off this year," Cowan said. "I do not know of anybody, except for Devon, who is going to drill two or three horizontals in the area during 2014 or '15."

The trend back toward vertical drilling is simple economics, Cowan said.

"As far as I know, a small producer is not able to gather the $3 million to $4 million to launch a horizontal well project," Cowan said. "That is not going to happen. They can drill a vertical well a lot cheaper."

Smaller producers watch bigger companies like Chaparral, Devon and SandRidge, note the horizons where they hit pay dirt, and then pick their targets, Cowan said. He said a producer with a tank battery already built will be able to put a new well into production for $100,000.

Cowan services old and new wells, although about 75 percent of the wells he sees are older.

"Some people drill new wells, going down to the Arbuckle (formation) then come on up to the Mississippi Chat or Mississippi Lime," Cowan said. …

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