OKLAHOMA CITY—Have you ever noticed that the roadrunner never stands still?

And like the legendary bird for which the company is named, Chaparral Energy Inc. is once again making quick tracks across the Oklahoma prairie.

A new board of directors and a newly focused emphasis on becoming a pure play operator in Oklahoma’s Stacked play Devonian, Mississippian and Pennsylvanian bonanza has given new life to a long-time legacy Midcontinent player.

Chaparral even has a newly designed web portal to itemize the transformation.

The company’s history dates to 1988. However, the 2014 collapse in commodity prices took its toll on indebted E&Ps in oil and gas, Chaparral included. The legacy company filed for Chapter 11 bankruptcy protection in May 2016, but persevered at the field level during the interim, thanks to a seasoned technical staff. Chaparral subsequently emerged with the court and creditors’ approval in March 2017 with a new board, new capitalization by equitizing $1.2 billion in debt and a new listing on the over the counter network as “CHPE”.

It also emerged with a strategic focus on becoming a pure play participant in Oklahoma’s rapidly emerging Stack play in Kingfisher, Garfield and Canadian counties.

Matt Mower, Chaparral’s resource development manager, outlined the strategic shift at DUG Midcontinent in Oklahoma City in late September.

“We'll be a pure play Stack player with approximately 110,000 net acres that includes a strong pipeline of economic opportunities that have solid returns in the current commodity environment,” Mower told DUG conference attendees.

Chaparral generated 23,900 barrels of oil equivalent per day (boe/d) on industry-leading lease operating costs of $3.87 per barrel (bbl) in the second quarter 2017. The company also reported significant reductions in general and administrative costs on a per bbl basis on the expense side of the ledger.

As for the revenue side, Chaparral is moving towards the future on a multi-part plan that includes divesting the company’s free cash flow producing enhanced oil recovery assets and 5,800 boe/d in production in northern Oklahoma. To date, Chaparral has received multiple bids and anticipates releasing news on the disposition in the fourth quarter 2017.

Secondly, Chaparral will steer the majority of its 2017 capital spending towards its oil-weighted Stack holdings and will do so while living within free cash flow. The company will spend $180 million in 2017 with 74% allocated to the Stack. Chaparral is also allocating free cash flow towards Stack development from a large inventory of legacy vertical and horizontal wells.

“We have—and will—spend the majority of that money in the Meramec and Osage intervals, but we will also invest in the Meramec and the Oswego as well,” Mower said. “We currently have two rigs running, one of them in Kingfisher and one of them in Canadian County (Oklahoma).”

Such efforts are expected to produce a year-end exit rate of 45% growth in the Stack, though corporate-wide exit rate will show a net decline on the basis of non-core property divestitures and a de-emphasis in drilling legacy Mississippian Lime and Marmaton plays, which are uneconomic in the current environment.

For Chaparral, the Stack is the story going forward. The company has large continuous acreage blocks with exposure to multiple Stacked pay targets, which support a multiyear drilling inventory. Much is already HBP with the exception of term acreage in Garfield County.

The company’s core holdings are situated in the normally pressured black oil window of the Stack, which features an oilier mix and lower well costs, providing the company 50% to 70% internal rate of returns across multiple formations. Chaparral began horizontal drilling in Kingfisher County in 2014 and now considers the area de-risked. Kingfisher’s Stack acreage represents production of 9,100 boe/d in the company’s portfolio.

In 2018, Chaparral looks to extend its Kingfisher learnings to delineate Mississippian and Pennsylvanian-era legacy holdings in Garfield County to the north of Kingfisher, where the company controls 40,000 net acres, and Mississippian and Devonian targets in Canadian County to the south, where Chaparral has captured 25,000 net acres via production.

“One of the great reasons why the Stack is such a great place to be is that we believe it's truly one petroleum system,” Mower said. “It's defined by world class source rock—the Woodford Shale—that has charged multiple reservoirs over time, including the Osage, Meramec and the Oswego.”

Mower said those same attributes extend north into Garfield County and apply to the up and coming Osage play.

“You'll see us active in Garfield the rest of this year and into next year drilling additional wells. As I discussed earlier, having a Woodford source immediately adjacent to your producing reservoirs is the key aspect of getting good wells.”

Mower itemized several Meramec, Osage and Oswego wells across its holdings (several are listed in Chaparral’s corporate slide presentation) featuring attractive IP rates with most showing oil cuts above 70%. Furthermore, the company has taken a scientific and technical approach to delineating the play across multiple stacked formations and is now moving towards optimized completions.

“As we continue to drill in the Stack, we will continue to test and deal with bigger completions. The increase in larger proppant loading over time has supported our current type curve over the past 12 months,” Mower said.

“At the same time that we're getting better wells, Chaparral is able to keep D&C [drilling and completion costs] in check,” Mower said. “The cost of these wells similarly increased by about $200,000 despite being in an inflationary cost environment. This has kept us well ahead of our peers in terms of well costs in comparison to our competitors who drill one-mile laterals.”

Chaparral plans to apply learnings from optimized Meramec completions in Kingfisher County to an expanded program of horizontal wells targeting the Osage formation in Garfield County, which features attractive well control from thousands of legacy vertical wells. To date, Chaparral has drilled 16 horizontal tests in Garfield County and was producing 800 boe/d from the Osage as of the second quarter 2017.

Look for that pace to accelerate in 2018, just like a roadrunner scooting across the prairie.