Osage Exploration and Development Inc (OEDVQ)

[Ed Ajootian]

Osage Exploration trying to make its mark in Oklahoma oil play

Tiny Osage Exploration & Development may be primed to cash in on its efforts to identify the edge of the developing Mississippian oil play.

By JAY F. MARKS | Published: March 9, 2012

An ambitious six-person oil and natural gas company based in California is out of make a name for itself in Oklahoma's growing Mississippian oil play.

But while other operators have concentrated their efforts closer to the Oklahoma-Kansas border, Osage Exploration & Development chose to strike off on its own.

Osage focused on the area around Crescent in Logan County after turning its attention to the Mississippian in 2009 based on geologist Greg Franklin's analysis of data from about 300 earlier wells.

CEO Kim Bradford said the key feature of Osage's acreage is the Nemaha Ridge, an underground fracture that occurred when Oklahoma was still a tropical area in the Southern Hemisphere.

Franklin's studies indicated the rocks near the ridge were porous, meaning they could hold more oil than tighter formations.

“This was the promised land,” Bradford said.

Osage got in early enough to amass its acreage at reasonable prices, which is important for such a small company.

Bradford said Osage, which started less than a decade ago, built its asset base in South America to fund its domestic exploration efforts.

Osage was among the early companies looking at acreage in south Texas' Eagle Ford Shale, but Bradford said it didn't have the cash to compete for leasehold with larger companies like Chesapeake Energy Corp.

That is why Osage was eager to find its own piece of the emerging Mississippian plan.

“We got way in front of the wave,” said Bradford, a California resident who spends about 25 days a month living in an Oklahoma City hotel.

Jack Zedlitz, Osage's investor relations and capital markets adviser, said the company figured to figure out where the Mississippian would be, instead of where it was a couple of years ago.

That gave the little company a jump on its larger competitors.

“We got there a year ahead of them,” Zedlitz said.

Narrow focus

Osage, which has its operations office in downtown Oklahoma City, owns about 20,000 net acres in the Crescent area, with Devon Energy Corp. surrounding its position, so officials are optimistic about the company's holdings.

Osage has partnered with Slawson Exploration Co. and U.S. Energy Development Corp. in its drilling program. Bradford said the partnership has drilled and fracture stimulated two wells.

The wells are 12 miles apart, on opposite ends of Osage's acreage. Production results should begin coming in soon.

Bradford said company officials are excited about the prospect of proving their theories about the area were correct.

“We've done an extraordinary amount of work in very, very fine detail,” Bradford said. “We've got an understanding of our area that is second to none.”

He said producers have not drilled any dry holes since they began drilling horizontal wells in the Mississippian, so it becomes a matter of economics.

“These are some of the most economic wells in America,” Bradford said.

He said he expects Osage's wells to return 100 percent of their cost to the company in a year, based on current expenses.

Osage expects to begin drilling two wells a month in the next 30 days or so, with plans to drill as many as 15 wells on its acreage, he said.

Bradford said Osage's narrow focus is not typical for such small companies, but it is on the verge of paying off.

“We picked this 200 square miles, and we've tried to own it,” he said. “This is our universe.”

http://newsok.com/article/3655839

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Above was an article in today's Oklahoman, first posted by 16bit on the SIBBR.

The reference to the fact that Osage's acreage is surrounded by Devon's no doubt had a lot to do with today's move in the stock. In spite of Devon having gotten caught with too much gas vs. oil in the last year or so, that company remains very highly regarded in the E&P world. There's a lot more to that story, and at some point when I have little more time I'll get that out.

In the meantime we sits & waits for the the flow rate for the first well. Kim (Osage CEO) remains adamant that he wants to just put out one PR on that well, which would include a 30-day IP rate. Assuming he sticks to his guns and if I'm recalling the frac date correctly I believe that would mean they would be announcing something during the week of 3/19. In the meantime hopefully they can get the 10K filing out of the way (which will be pretty boring since it won't have anything related to their Miss. play in the results). Folks that have missed the boat on this may want to have some dry powder ready to buy on any dip that might ensue if in fact they file the 10K before announcing the first well's the flow rates.