"We have worked hard in the last year or two to get the story out that it [Spyglass] is a reasonable and economic area," says Tom Lantz, chief operating officer for American Eagle Energy.
Considering the unique geology and financial appeal of the Spyglass area, it may seem hard to believe that Lantz
and the rest of the American Eagle Energy
management team would have difficulties convincing investors and industry players about the potential of Spyglass.
Although Colby, Lantz
and the rest of the team might argue that the story, or the main pitch, of American Eagle Energy
is about a specific geographic region on the border of North Dakota and Saskatchewan, the full story of the veteran-laden team has to include the people developing the place.
has spent the last 14 years of his
career in the Williston Basin
working to make people believe.
In 2001, Lantz was the team leader at Halliburton's Integrated Solutions Group, working in the Elm Coulee field in Montana to prove out the concept of hydraulic fracturing on fewer than 12 horizontal wells.
"As an industry, we knew you might be able to make gas work, but it was sort of conventional wisdom at the time that you couldn't economically produce oil out of that shale rock," Lantz
"You can imagine that when we started trying a few of these things [hydraulic fracturing and horizontal drilling] the kickback we got."
The kickback and industry skepticism is a natural part of developing an oilfield, Lantz
"It is representative of how the industry works and behaves."
During the early days in the Elm Coulee field when well completion costs seemed uneconomical, Lantz
learned how to maintain his
confidence in the process of horizontal drilling and hydraulic fracturing.
"We would bring the wells on and they would come off really hard, but to everybody's credit, there was a certain amount of willingness to stick with it and tweak the process," he
At the end of 2001, wells that had been on production for six to nine months were showing reasonable production rates.
During that time, the investors and the companies involved were nervous, he
Before that time, the wells would show high initial production rates but fall off considerably.
Although Lantz doesn't point to a single moment when he, or his many team members from Halliburton or Lyco, knew the process they were tweaking was a success, he does recall a memorable moment.
The group working on the wells would hold technical committee meetings.
During a meeting at the end of 2001, Lantz
explains, "I lightheartedly said at the beginning of a meeting that we might have a billion barrel oilfield.
Colby's discovery, combined with the results from the vertical test, led him along with Lantz and industry veteran geologist Richard Finley, the former owners of American Eagle Energy Inc. to combine.
In 2011, Colby's company merged with Lantz
and the Halliburton
team were completing wells in the Elm Coulee Field in 2001, well costs were roughly $2.5 million to $3.5 million.
Lantz laughs when he
talks about the "unheard of sized frack jobs," used then that amounted to roughly 300,000 pounds of proppant per well in only a few fractures per well.
"They were huge then, but comically small in today's world."
Although American Eagle Energy
is completing wells in the Spyglass area today at a higher price point than the early wells Lantz worked on-approximately $6 million-the wells are still much cheaper than most in the basin.
According to Lantz
, the shallower depth of the Spyglass is the key component to the whole thing.
The area presents both the Middle Bakken and the upper two benches Three Forks at depths of 8,000 feet, compared to depths in the 10,000 to 11,000 foot range in other parts of the basin.
"It doesn't do you any good to drill cheap wells if they are poor wells," Lantz
Results from producing wells reveal that American Eagle Energy
has nothing to worry about.
Wells in the project area show an estimated ultimate recovery of 450,000 barrels of oil equivalent.
The internal rate of return on the wells is almost 50 percent and the payback period for each well is 1 to 2 years.
The rock in the Spyglass area is actually better than most in the basin, according to Lantz
, and it is normally pressured compared to other parts of the basin that are over pressured and have tighter rock and lower porosity that require higher volumes of proppant to keep the fractures open and the wells flowing.
"When you are starting with a $3 million head start on your economics, it goes a long way on having some pretty impressive results," Lantz
Almost three years after uniting with Lantz
and other industry veterans to develop the Spyglass project, Colby says the entire team is now working on a single vision.
"We now have some real history with our wells," Lantz
There are also other operators in the area, including SM Energy and Samson Resources that have had similar results.
"You are seeing a consistency there that is starting to gain traction with a lot of the investment world," Lantz