NEW ORLEANS—It will be live and learn in 2014 for Cimarex Energy Inc. (NYSE: XEC).

The company is testing all four benches of the Wolfcamp Shale in the Delaware Basin and prospecting the Avalon Shale in New Mexico as the independent perfects a Permian Basin completion recipe that calls for “upsized fracs,” downspacing, and extended laterals.

The Avalon Shale geologically resides just above the Bone Spring interval in the Delaware Basin with a core in western Lea County, N.M. Cimarex chief operating officer Joseph Albi told attendees at the Howard Weil Energy Conference that the top of the Avalon was found at a depth of 9,500 to 10,000 feet. To date the Denver-based company has drilled five horizontal wells into the Avalon, each sporting a 4,500-foot lateral. Cimarex increased the number of stages to 20 per lateral from 10 to 12 previously for its other horizontal efforts.

“We are seeing great results for that,” Albi said. “One of our wells averaged a 30-day peak rate of 1,080 barrels of oil equivalent per day (boe/d), 70% of which was oil. It makes this play very economic for us.”

Cimarex has 13,700 net acres prospective for the Avalon and has earmarked $150 million in 2014 capital spending to develop the play. Plans call for a 15 to 20 well horizontal program in 2014.

“We identified over 200 wells, so at this run rate it would be 8 to 10 years worth of drilling still left to do in the Avalon,” Albi said. “It should start to get some traction for us as we move forward with the program.”

The Avalon is the latest in an expanding Delaware Basin program for Cimarex, which previously focused on successful exploitation of the various benches in the Bone Spring formation.

“Our focus in the Permian this year is really the Wolfcamp,” Albi said. “It has proven itself over the last few years to be a very valuable resource for our company. Our goal is really to learn the best way to fully develop this wonderful asset. We own over 180,000 net acres in the Wolfcamp corridor.”

Albi cited several experimental efforts underway at Cimarex to solve the Wolfcamp’s geological and engineering puzzle. The top of the play is found at a depth of 9,000 feet in Culberson County, Texas but dips to 11,000 feet east of the Pecos River in Ward County. The company has three core Wolfcamp areas and has been drilling 4,500 horizontal laterals at $8.5 million each. A recent two-mile lateral test with 36 frac stages came in at $13.5 million. The main focus for the Cimarex Wolfcamp effort is in Culberson County, Texas where the company has 100,000 net acres, including an area of mutual interest with Chevron Corp. Additional Wolfcamp prospects are located north of the New Mexico state line.

The company also has a second core Wolfcamp focus on 40,000 net acres in Reeves County west of the Pecos River and another 32,000 net acres of Wolfcamp holdings east of the Pecos in Ward County. Albi said the Wolfcamp was intriguing because of the 1,500-foot geologic column split into four benches, prosaically labeled A through D in the Permian.

The company has been drilling the D interval in its Culberson County core. The D is sometimes referred to as the Cline Shale in the Midland Basin. Recently, Cimarex began prospecting the C interval through a five-well program and has made preliminary forays into the A interval.

In all, Cimarex has drilled 47 Wolfcamp wells on its Culberson acreage. Until last year, most wells entailed 4,500 laterals with 10 to 12 frac stages. In early 2014, Cimarex began experimenting with its completion program through the use of what it terms "upsized fracs."

The upsized frac methodology adds more stages and proppant versus traditional completions over the same lateral length. Previously, Cimarex was using 4 million pounds of sand in 12 stages, including 400,000 pounds of 100-mesh sand, and pumping at a rate of 100 barrels per minute. The upsized frac employs 6 million pounds of sand in 20 stages, including 2 million pounds of 100-mesh sand, and is pumped at a rate of 40 to 60 barrels per minute.

“We put a well into the A interval and we used one of these upsized fracs, a 20-stage frac, and got ourselves a 1,250 boe/d 30-day average completion,” Albi saidabout the upsized frac program and deployed the methodology to the lower D interval.

“Our first well out of the shoot: 1,520 boe/d,” Albi said. That represented a 30% uplift in production and created favorable economics. Cimarex next deployed the upsized frac concept using a 10,000-foot lateral in the D bench.

“We got ourselves a 2,800 boe/d well, nearly double the rate we saw for the 4,500 completion,” Albi said. The lateral produced a commodity mix that was 40% gas, 27% oil, and 33% natural gas liquids (NGL). Cimarex plans to continue tweaking its approach in coming months.

“Just coming out of the shoot this year we’ve been able to test some things we didn’t know three months ago: the impact of the upsized frac, the production out of the A (bench), the upsized frac in the D (bench), and the long lateral in the D. There is still much to learn. We have two other pilots drilling right now.”

On tap is a stacked test of the Wolfcamp. The company will drill two stacked laterals into the D and C sections of the Wolfcamp and complete both together to test for interference. Cimarex is also readying a four-well, 80-acre pilot in the D section to test downspacing and expects to announce results from the tests in the company’s third quarter earnings call.

The upsized frac approach pays off in both greater production and a slower decline rate, demonstrating superior economics. Albi disussed decline rates and economics on one upsized frac well. The program added $700,000 to well cost versus the traditional $8 million on a 4,500 lateral with 10 to 12 stages. However the rate of return moved from 30% pre-tax on the traditional approach to 77% on the upsized frac methodology.