On the Central Basin Platform (CBP), Ring Energy, Inc. (REI) is targeting the San Andres formation. The San Andres is a high oil-saturated “conventional shallow non-contiguous carbonate reservoir” at approximately 5,000’ and is primarily an oil-bearing formation (approximately 96% oil) that has been drilled and produced for over 90 years. Of the over 30 billion barrels produced from the Permian Basin approximately 40%, or 12 billion barrels, came from the San Andres reservoir. Although traditionally produced vertically, REI has focused on drilling the San Andres horizontally, resulting in enhanced rate-of-return (IRR’s) that exceed an average of 65% ($40/bbl oil net realized price received and includes electric submersible pump- (ESP) to-rod conversion costs).
After drilling and completing three successful horizontal San Andres pilot wells at the end of 2016, REI initiated a horizontal development drilling program on the CBP in early 2017 within its core development area of Andrews and Gaines Counties. As of 4Q’2020 Ring has drilled 114 total gross horizontal wells and operates 18 saltwater disposal wells (SWDs).
To reduce disposal costs REI purchased approximately 100 surface acres on which to drill their own SWD’s to eliminate landowner royalties/fees. As of 4Q’2020 REI owns and operates 18 saltwater disposal wells (SWDs) with a permitted disposal capacity of 255,000 Bw/d with current volumes of 101,400 Bw/d. To reduce distribution and transportation costs REI also owns and operates 61 miles of water gathering pipeline, 58 miles of oil pipeline, 33 miles of gas pipeline, and an oil storage tank facility with a capacity of 4,000 Bbls and sales point.