The thing that bugged me the most about Osage when I first started researching them was, why was their area of the Miss. play, Logan County, not even on SandRidge's map? SD was the company that really opened this play up so you would think that they knew where the play boundaries were. Thankfully I was able to get my head around this issue thanks to help from the consultant that I use for O&G projects, who sat down with the Osage geologist, and I bought a huge amount of the stock.
Logan County has now been pushed front & center on the Miss. play stage thanks to Devon's Matthews 1-33H well, which Devon announced in their 4Q CC last week. In that CC, Devon had this to say about this well and their Miss. play in general:
"In the Mississippian oil play located North Central Oklahoma, the partnership has now secured approximately 230,000 net acres. We drilled our first vertical well in the second quarter of last year to gather data and have since drilled our first horizontal Mississippian producer, yielding very encouraging results. The Matthews 1H was brought online in the fourth quarter and achieved a 24-hour sustained IP rate of 960 barrels of oil equivalent per day, of which greater than 80% was oil. Through the first 30 days of production, the well averaged 590 barrels of oil equivalent a day. These results are among the best reported in the play to date. And with an API gravity of around 40 and low sulfur content, this appears to be some of the best-quality crude oil in the lower 48. We are obviously very encouraged with these results and plan to drill or participate in approximately 15 Mississippian wells by year end."
This is a blockbuster well, about double what the average SandRidge well is doing in the north. When I was at NAPE, I happened upon a great map of the Miss. play that actually showed Logan County on it, which can be downloaded from http://finance.groups.yahoo.com/group/EnergySectorInvesting/files/ (you need to join the group to download files, its free & easy to do so). As shown on the lower left of that map (zoom required), Devon's well is located in Logan County, about 9 sections (or 7 miles) to the east of Osage's northern well (25% non-op interest, operated by Slawson).
Devon has nearly a quarter million acres in the Miss. play and where do they choose to drill their first Hz. well in that play? Right there in Logan County, 7 miles from Osage's well. And the damn thing comes in at double what SD is doing up to the north!
But wait, just like the Ginsu Knives it gets better. Word has it that the site Devon selected for their 2nd Hz. well in this play, which I believe is drilling as we speak (or may have already finished), is a only 2 miles from some of Osage's acreage. Its hard to conceive of a better vote of confidence on Logan County than this. Word also has it that on the first 2 Slawson wells, they copied Devon's frac design on the Matthews well to a T.
So in case you were wondering why this stock has been on a tear in the last month or so, here's why.