The Mississippian Lime: America’s Next Big Resource Play

The Lime is shallower than the Bakken and Eagle Ford, companies use smaller drilling rigs and cheaper proppants, which has led to drilling and completion costs between $3 and $3.5 million, less than half of what an operator would pay in the Bakken or Eagle Ford. The play is estimated to span 17 million acres with oil in place estimates ranging from 5.4 to 5.9 billion barrels of oil equivalent (BBOE). An intelligent discussion on the Mississippian Lime can’t be had without talking about Sandridge, which has drilled 382 horizontal wells, or 44% of the total horizontal wells drilled in the play. The company has amassed 1.7 million net acres in the Lime, from which it expects to generate estimated ultimate recoveries (EURs) of 456 thousand barrels of oil equivalent (MBOE) per well.

The Mississippian is by far the cheapest formation to produce from with respect to the peer group. The Mississippian is a play that produces more hydrocarbons per dollar with the main negative being a lower oil cut. Despite its lower oil cut, an average rate of return of 119%, a rate that has plenty of natural gas pricing upside. The Lime also gets oilier as you move from East-to-West, and several wells in Alfalfa County, Oklahoma with 30-day production rates in excess of 2,000 BOEPD (90%+ oil cut). So while it’s a gassier oil play than some would like, oil cuts vary and returns are high. These numbers aren’t going unnoticed by the oil and gas industry, but have prompted industry titans such as Chesapeake Energy, Apache, Devon Energy, Encana and Repsol to accumulate large acreage positions in the play.