22 WW W.OGFJ. COM | OIL & GAS FINANCIAL JOURNAL JANUARY 2016
DON STOWERS, OGFJ CHIEF EDITOR
EXECUTIVE PHOTOS BY MARK DOOLITTLE
MOTIVATION FOR DEVON WAS 80,000 ACRES IN CORE OKLAHOMA STACK,
ONE OF THE MOST PROLIFIC AND ECONOMIC OIL PLAYS IN THE US
Felix selling STACK assets to Devon
OIL & GAS FINANCIAL JOURNAL: Congratulations to you
and the whole team, Skye. I’m assuming this was a win-win
for Felix and Devon.
SKYE CALLANTINE: Without a doubt, Don. Our team dedicated countless hours assembling and proving up an industry
leading position in the most economic portion of the STACK
crude oil play in Oklahoma. Devon’s decision to acquire Felix
in this environment reaffirms our long-held belief that this
is a world-class asset. The acquisition adds significant resource and very high-quality drilling inventory to Devon’s
legacy position in the STACK. With the addition of our assets,
Devon now owns 430,000 net surface acres in the STACK,
which I believe represents the largest and best position in
the most economic play in country. This is a cash and equity
deal so we will soon be, and plan to remain, large Devon
shareholders. We strongly believe in the quality of Devon’s
asset base, their ability to execute on those assets, their
leadership and financial security, and the long-term value of
our equity position in Devon.
As a Rockies-based company, why did you choose
the Mid-Continent for your operations, and particularly,
why the STACK crude oil play?
CALLAN TINE: My partners and I started Felix in early 2013.
We evaluated and pursued opportunities in numerous basins
looking for projects that fit our core competencies and had
the potential to make a return for our investors. We found
that the Anadarko Basin in the Mid-Continent had more
quality opportunities and a lower cost of entry than most
other basins. Staying true to our strategy to develop projects
of scale, we assembled positions in two different areas of the
Mid-Continent – a large position focused on Pennsylvanian
sandstones in Custer and Dewey Counties (in Oklahoma)
and the STACK play (also in Oklahoma). Early in 2015, we
sold our assets in Custer and Dewey Counties to focus our
efforts and capital on the STACK.
Not all our readers are familiar with the STACK, Skye.
Can you tell our audience a little about it? Also, your assets
are surrounded by companies like Devon, Newfield Exploration, Cimarex Energy, and Continental Resources that
seem to use different words like STACK, SCOOP, and CANA
Woodford. What zones were you pursuing and how do the
zones differ from what other companies in the area are
CALLANTINE: Oklahoma operators that make a new discovery have traditionally used acronyms to describe the
particular geographic area of interest. Newfield discovered
and named the STACK play in 2013 which is located in the
three-county area of Blaine, Canadian, and Kingfisher Counties, west-northwest of Oklahoma City. “CANA” in CANA-Wood-ford is shorthand for Canadian County, where the liquids-rich
Woodford Shale was originally discovered in Oklahoma. The
acronym “STACK” stands for Sooner Trend (oil field) Anadarko
(basin), Canadian, and Kingfisher (counties).
We believe the core positions of STACK and CANA can
be used interchangeably as the plays overlap and both have
tremendous potential in the Meramec, Osage, and Woodford
formations. The stratigraphic column in this area consists
of thousands of feet of potential pay and more than 10
horizontal targets. Felix primarily focused on the 400- to
500-foot thick Meramec formation, drilling more than 30
horizontal wells in multiple benches, with additional tests
in the Woodford and Osage zones. Within the core area of
STACK, the industry has drilled approximately 1,000 horizontal Woodford wells and 150 horizontal Meramec wells.
You aggregated 80,000 net acres in the core of the
STACK located in Canadian, Blaine, and Kingfisher Counties, Oklahoma. And, you’re producing more than 10,000
barrels of oil equivalent per day. How was Felix Energy able
to grow to a large scale in a competitive play to assemble
its current position? How expandable is it?
MICHAEL HORTON: When we started, I wasn’t sure that
we’d even be able to put 10,000 acres together. Newfield had
done a great job assembling its position, and the rest of the
EDITOR’S NOTE: On Dec. 7, Devon Energy Corporation, the
sixth-largest US petroleum producer according to asset value, announced its $1.9 billion acquisition of Felix Energy, a
privately held, Denver-based E&P company. Prior to the deal
closing, OGFJ spoke with Skye Callantine, president and CEO
of Felix Energy, and two members of his executive team – Michael Horton, vice president of land, and Bill Arnold, vice president of operations.