Houston (Platts)--18Sep2014/631 pm EDT/2231 GMT

Continental Resources unveiled results of the Springer Shale on Thursday, a new Oklahoma oil play that could help boost the state's already growing production to levels not seen in decades.

The Springer, chiefly sited in Grady and parts of Garvin counties at 12,500-foot depths, is yielding top-notch initial output rates and economic returns, company managers said Thursday in webcast remarks during Continental's 2014 Analyst Day in Oklahoma City.

The company's results in the Springer, combined with its own and the industry's mounting production at the South Central Oklahoma Oil Play and output from other formations in the state's subsoil, is adding to Oklahoma's already mounting production of 345,000 b/d in June, according to US Energy Information Administration data.

"Oklahoma could potentially become the nation's [third-highest] oil-producing state," Continental CEO Harold Hamm said in opening the 2014 event, its first such investor gathering in two years.

Oklahoma's recent peak output was in 1982 at about 500,000 b/d. Today it is the fifth-highest producing state. Texas ranks first, North Dakota second, California third and Alaska fourth.

Continental, a pioneer in North Dakota/Montana's massive Bakken Shale oil play reservoir, was instrumental in getting activity there off the ground nearly a decade ago. Today it ranks first in production there among dozens of operators at nearly 110,000 b/d of net oil equivalent.

The Bakken produces about 1.1 million b/d of oil.

Continental debuted SCOOP at its 2012 Analyst Day and produced 34,400 boe/d from it in the second quarter; the company expects 36,400 boe/d by year's end.

In the two years since Continental first publicly showcased it, SCOOP has become an industry phenomenon among Oklahoma players and has attracted such large operators as Marathon Oil, Newfield Exploration and several others.

In Hamm's estimation, SCOOP rivals the Bakken. He estimated Continental's acreage holds about 3.6 billion boe of resource, against the Bakken's 4.1 billion boe. And, the "type curve," or typical well in the SCOOP, is 655,000 boe, compared to the Bakken's 603,000 boe.

Early wells in the Springer Shale -- located in the heart of SCOOP -- have shown a type curve around 940,000 boe, although they yield about 67% oil, compared with the Bakken's 85%. And the return rates for Springer wells are high, about 105%, compared with 45% in the Bakken, according to presentation slides showed by Continental's President and Chief Operating Officer Jack Stark, who was named to his post Wednesday.

"If you liked the Bakken, you're going to love SCOOP," Stark said at the Thursday meeting.

The company now has 112 operated wells in the SCOOP, including 86 wells drilled in the two years since it first showcased the play.

The Springer Shale holds about 447 million boe of net resource potential to Continental, which breaks down to 127 million boe in the oil fairway and 320 million boe in the gas and condensate fairways. The company holds 195,000 net acres in the play, including 118,000 net acres in the oil fairway.

Continental drilled its first Springer well about 20 months ago and its first 11 producing wells averaged a solid 700 boe/d each for 30 days.

The Springer complements SCOOP, Resource Development Manager Dan Harms said.

"This is definitely an oil play and really exciting, even for engineers," Harms said.

He said Continental's August production from the play alone averaged a net 3,629 boe/d.

Also, in the Woodford Shale -- also within the SCOOP play, consisting of earlier-age rocks below the Springer and prospective in an area south of Oklahoma City -- longer laterals or horizontal legs of at least 7,500 feet are the order of the day going forward, Continental officials said. That compares with around 4,500 feet previously.

The result is lower drilling costs of about 50% less per lateral foot, officials said.

The Woodford is thick, up to 950 feet in some places, and has good organic content porosity and permeability, said Andy Rihn, Continental senior exploration geologist.

"We believe that extended laterals will further unlock the oil window," Rihn said.

Meanwhile, in the Bakken, development on tighter spacing continues, as Continental reaps the benefits of its long expertise in the play. The company has increased production 58%/year in the last three years and reduced well costs to $7.5 million each at end-2013.

Continental's 4.1 billion boe of estimated Bakken resource potential on its acreage is up from 3.4 billion boe just two years ago, said Stan Wilson, the company's vice president of resource development.

And Continental keeps expanding its holdings there. In the past two years, the company has added about 250,000 Bakken acres, said Don Key, Continental's Bakken land manager.

"We think we'll get to look at acquisitions and trade opportunities going forward," Key said.

--Starr Spencer, starr.spencer@platts.com --Edited by Jason Lindquist, jason.lindquist@platts.com

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