LINN is focused on developing high-return, liquids-rich opportunities in the prolific Granite Wash play, which covers a trend extending from the Texas Panhandle eastward into southwestern Oklahoma. LINN holds a large acreage position of almost 70,000 net acres in the Texas Panhandle area, alone, and holds about 25,000 net acres in the Oklahoma portion.
The Granite Wash consists of a series of thick, multi-layered formations of low-permeability and liquids-rich sandstones that produce at depths ranging from 10,000 feet to 16,000 feet. Over the past few years, the Granite Wash has emerged as a horizontal drilling play, utilizing multi-staged hydraulic fracturing technology.
In late 2011, we significantly added to our inventory of Granite Wash drilling locations through an acquisition of Mid-Continent properties. We have identified more than 600 horizontal drilling locations on our Texas Panhandle acreage and multiple vertical infill drilling locations.
Adding to the attraction of the area, wells typically produce large volumes of condensate and natural gas liquids (NGLs) – significantly increasing the rate of return. We drilled almost 30 operated Granite Wash horizontal wells in 2011 and plan to drill approximately 60 in 2012.
In the first quarter of 2012, we drilled three successful wells targeting an interval rich in oil called the Hogshooter. Average initial production rates were approximately 2,500 Bbls/d of oil, 500 Bbls/d of NGLs and 3 MMcf/d of natural gas. We have identified approximately 50 additional Hogshooter locations in the vicinity of these three wells and own substantial additional acreage in both Texas and Oklahoma that we will evaluate for Hogshooter potential.
LINN is also evaluating other shallower oil-bearing intervals in the Texas Panhandle such as the Lansing, Cleveland and Tonkawa.
Gathering and Water-Management
To increase the efficiency of production operations, provide additional takeaway capacity, and maximize the realized price of our natural gas and NGLs, LINN constructed a 63-mile gas-gathering system in the Granite Wash in 2011. We plan to extend this system in 2012 through installation of an additional 43 miles of pipeline, compression and associated facilities.
LINN also built water-handling facilities to increase efficiency and conserve water. Using pipelines, we move water to each of our locations and then flow water back to a central location where it is recycled.