VERNAL — There's a new kid in the oil fields of the Uintah Basin with plans to plug about $100 million a year into a drilling program in the Monument Butte field.
That's $100 million a year for 15 to 20 years.
Newfield Exploration has been around since 1989 but only recently added the Basin's 110,000-acre Monument Butte field to its impressive list of areas of operation, which include the Gulf of Mexico, the onshore U.S. Gulf Coast, the Anadarko and Arkoma basins of Oklahoma and Texas and international venues.
Last August, Newfield purchased Inland Resources for $575 million and established operations in Duchesne and Uintah counties. The acquisition is the first for Newfield in the Rocky Mountains, said Steve Campbell, manager of investor relations for Newfield.
The move by the Houston-based independent crude oil and natural gas exploration company is nothing but good news for the local oil patch and the Uintah Basin's economy. Newfield kept all of the estimated 150 former Inland Resources employees on its payroll after the buyout and announced plans to double current production of 7,000 barrels of oil a day to 14,000 by the end of 2006, said Campbell.
"We inherited a top-notch group of people in that Roosevelt office who have done a great job of managing that field," he said. "We have every intention of being a long-term player. . . . We have an office in Denver, and we are looking for opportunity throughout the Rocky Mountains."
There were 147 oil wells in the Monument Butte field in 2004. Since Newfield closed its deal with Inland in August, production of those wells has either met or exceeded expectations, according to Campbell.
"We have been running a steady three-rig program since we bought it," he said.
The purchase of the oil and gas field in south Myton has extended Newfield's reserve life and has given the company "a real stable base of future growth," said Campbell.
And now Newfield is expected to give the Basin's oil patch workers and supply companies real stable work over the next two decades.
"We think there are over two billion barrels of oil in place in that field, and only 30 million barrels have been produced to date. So our goal over the next 20 years is to chip away at the two billion barrels that we know is down there," he said.
Campbell described Newfield as a "very conservative company by nature," which looks for ways to reduce risks.
One of the biggest risks in the oil industry is its cyclical nature. Newfield has protected itself from radically low price swings by selling about 70 percent of its total production through 2010 at an average of $33 to more than $50 a barrel.
"So if you see the market dip tomorrow, we are basically insulated," said Campbell. "Because this is such a large field, you want to look at it as a long-term investment. You want to be able to shield yourself from downward moves in pricing."
Newfield plans to carry out a very repetitious drilling program with an estimated 175 to 200 oil wells drilled per year, he said. "We have the equipment to make the roads and the pads, we have the drilling rigs, we own and operate completion units, we have gas gathering, we have the water flood assets in the field. We look at it as one-stop shopping."
While Newfield is certainly resourceful, there are still several services it hires on from "the outside," said Campbell. "We don't own everything we use. . . . We use welders, insulators, pipe fitters."
Although it's all about oil right now in the Basin for Newfield, 70 percent of the company's total production is natural gas. That's why Newfield is also studying the potential for natural gas production beneath its Monument Butte field, Campbell said
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