Red Willow Production CompanySouthern Ute Indian Tribe Seal Red Willow Production CompanySouthern Ute Indian Tribe Red WillowSouthern Ute Indian Tribe Seal Red Willow
Red Willow Production Company - Our History
Coal Bed Methane
Moving off reservation
Offshore Gulf of Mexico
Red Willow Production Company - Texas

Our History

Origin

Tribal Council started Red Willow in 1992. The original business plan proposed buying existing conventional wells within the exterior boundaries of the Reservation. This was a conservative plan designed to provide the Tribe with a modest rate of return on its original $8 million investment while increasing control of the Tribe's energy resources and building knowledge of the oil and gas industry.

Red Willow increased in size through the years. With the first acquisition of 18 conventional gas wells made from Conoco in 1993, Red Willow began a program of continuous growth and expansion.

Well count

Coal Bed Methane

Red Willow grew dramatically after the Tribe entered several transactions to monetize Section 29 tax credits and subsequently began to operate coalbed methane (CBM) wells on the Reservation. Red Willow continued to grow through a series of San Juan Basin CMB acquisitions. Notably, the acquisition of properties owned and operated by Cedar Ridge, Questar, Chevron, Briggs, and Kukui helped to establish Red Willow as one of the larger operators on the Reservation.

One of Red Willow’s biggest growth steps occurred when the U.S. Supreme Court heard and settled a CBM mineral ownership lawsuit in 1999 with Amoco (now BP). Red Willow obtained contractual interest in more than 250 coalbed methane spacing units as part of the Tribe's settlement with Amoco. The production from these properties continues to grow with facility development and infill drilling that accounts for roughly 1/3 of the company’s total CBM production.

Most recently, Red Willow reached an agreement to purchase Samson Resources’ San Juan Basin assets out of bankruptcy. This 2016 acquisition nearly doubled the company’s existing operated well count and more than doubled daily operated production.


Moving Off Reservation

In an effort to both replace declining reserves on the Reservation and further diversify the portfolio, Red Willow began exploring for new resources off the Reservation in 2000.

Red Willow’s first off Reservation projects were largely focused on conventional exploration targets, using the latest 3D seismic and subsurface prospecting technology. Projects were located around the US, in areas such as South Texas, the Williston Basin, and a joint venture with the neighboring Ute Mountain Ute Tribe in Western Colorado.

Red Willow “went international” in 2002 when it invested in a company with a large CBM project located in Alberta, Canada. Trident Exploration Company of Calgary, Alberta partnered with Red Willow in an attempt to successfully expand CBM development across western Canada. Red Willow ultimately divested its interest to Trident in 2006, after significant field production and development was established.

In 2011, Red Willow began to focus on oil assets. This eventually led to significant projects in the tight oil resource plays of the Permian Basin, West Texas and conventional exploration in the Deepwater Gulf of Mexico.


Offshore Gulf of Mexico

Red Willow ventured offshore in 2003 via an exploration agreement with Houston Energy and W.G. Helis in the Gulf of Mexico. Houston Energy generated seismic prospects that W.G. Helis and others operated. The program ultimately resulted in over 28 completions in new offshore wells. Smaller targets became economic by tying these wells in to existing operators’ facilities.

To support the Gulf of Mexico drilling program Red Willow opened an office in Houston, Texas. Expansion of the Gulf Coast program included exploring onshore in Texas and Louisiana. Red Willow was the operator of the wells with Houston Energy as a partner. In 2004, Red Willow entered another exploration agreement with Houston Energy to explore in the Deepwater Gulf of Mexico. The Deepwater program drilled its first discovery in 2005. Red Willow ultimately discontinued the Shelf and Onshore exploration programs, but remains committed to the Deepwater and has built an inventory of prospects.

Red Willow currently has twelve wells producing from five fields. Production is approximately 16,000 BOEPD net to Red Willow (125,000 BOEPD Gross). Most of the production (78%) is oil, with natural gas being a lesser, associated product. A big driver is Red Willow’s net interest in nine wells in three fields that produce to the Delta House Floating Production System (FPS). Red Willow’s partner, LLOG Exploration, operates the fields and the FPS. Galapagos and Big Bend are Red Willow’s other producing fields, both are operated by partner Noble Energy.

Two new fields will be coming on line in late April-May, 2017, Barataria and South Santa Cruz. These fields are operated by Red Willow’s partner, Deep Gulf Energy. These two fields will be produced together through the same subsea equipment to a Chevron-operated facility, and will add another 2,000 BOEPD net to Red Willow’s Deepwater production. In 2017, Deepwater production will generate roughly seventy percent of Red Willow’s earnings.

Red Willow’s recent exploration success has not only resulted in the producing fields mentioned above but also in eight new discoveries that will be brought on production over the next three years. The combined thirteen fields will generate earnings for more than twenty years. In addition, Red Willow owns an interest in thirty eight undrilled exploration prospects. Three to five exploration wells are planned each year for the next few years; with the expectation that at least half will be successes. Red Willow’s historical success rate on exploration wells is 76%, compared to the industry average of 33%.


Texas

The West Texas Permian Basin, including the Delaware Basin, is one of the most prolific oil and gas producing areas in the United States. While Red Willow has historically operated throughout the greater Permian Basin, the company is currently focused on continued investment in projects operated by partners Concho Resources and Occidental Petroleum.

Both Delaware Basin projects are located in south-central Reeves County, in the heart of the horizontal Wolfcamp oil play. Significant leasing, exploration, and initial investment in these projects began in 2013. Since that time, the industry and Red Willow’s partners have continued to expand best practices for drilling, completions, and field development. What once was a little-tested concept of extracting oil from tight shale formations has now evolved into one of the most active and economic shale plays in the world.

Red Willow and its partners have the unconventional shale oil knowledge and experience to provide continued production growth and strong return on investments in the most geologically prospective parts of the Delaware Basin for years to come.


Future Opportunities

Red Willow continues to actively pursue both exploration and exploitation investment opportunities. Outside sources, existing partnerships, and in-house professionals generate many of these opportunities. Red Willow has a proven and experienced team that is capable of executing exploration and operations anywhere in the country. Red Willow takes considerable pride in being a respected partner and works hard to maintain positive relationships in the industry and local communities. The company plans to grow in areas that can continue to add value to the organization and its owners and meet the highest standards of safety and environmental stewardship.

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