Oklahoma City-based Antioch Energy LLC has reached a deal with WaterBridge Resources LLC of Houston to handle water produced along with its oil and natural gas in southeast Oklahoma, the companies said Wednesday.
Under terms of the deal, Antioch sold its existing produced water infrastructure in the Arkoma Stack play to WaterBridge. That infrastructure includes a network in Hughes County with capacity of about 40,000 barrels per day and is expandable to 120,000 barrels per day within six months.
The companies did not disclose financial terms of the deal.
WaterBridge will own and operate the system and develop it further, allowing Antioch to focus on its oil and natural gas production in the area, Antioch President Nathaniel Harding said in an interview Wednesday.
“To have this guaranteed takeaway capacity helps our operations, and the fixed rate is very cost effective,” Harding said. “This deal unlocks a lot of the value of the oil and gas resource. It helps us achieve that goal of focusing on creating value on the development and production of oil and natural gas resources.”
Produced water refers to the ancient seawater that is naturally occurring deep underground and is recovered along with oil and natural gas production. WaterBridge owns and operates produced water pipeline and disposal systems in the Arkoma Basin and in the Delaware Basin in west Texas.
Antioch Energy last year began applying modern horizontal drilling techniques to the Arkoma Basin, an area that historically has been home to vertical, dry natural gas wells. The area over the past two years has attracted nearly $2 billion in oil and natural gas investment.
Antioch executives plan to drill nine wells in the area this year and 14 next year, Harding said.
Antioch has 17 employees and has identified more than 500 drillable locations on its Arkoma Stack acreage.
“Part of the reason for the low break-even price in the area is because the wells are shallow and drill very fast,” Harding said. “The capital expenditure is significantly lower than in other places. We can drill a lot of wells with just one rig.”
The planned drilling pace will lead the company to have about 95 percent of its acreage in the area held by production by the end of next year, allowing Antioch teams to develop the field more methodically, Harding said.
“Then we’ll have the ability to operate out of free cash flow,” he said. “We have shallow wells with low capital expenditures, but they still have strong liquids-rich production. There’s a big demand from Wall Street to grow and operate within free cash flow.”
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