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 its 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 in the size, complexity, risk level, and financial return of its acquisitions.

Coal Bed Methane

Red Willow grew dramatically after the Tribe entered several transactions to monetize Section 29 tax credits and began to operate its own coalbed methane (CBM) wells in 1995. Monetizing tax credits was critical to be competitive in coalbed methane wells. Red Willow took on its first coalbed methane operations out of a bankruptcy that included wells on Tribal lands. Subsequently it made several other acquisitions of CBM and conventional wells and well working interests on the reservation and in New Mexico. These acquisitions included Cedar Ridge, Questar, Chevron, Sawmill Canyon, Briggs, and Kukui Operating Company. These acquisitions generated many facility optimization and infill drilling opportunities. The well count and production levels increased significantly with these additional CBM assets.

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). We obtained a 32% 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 and accounts for about half of our total CBM production.

Moving Off Reservation

With a significant presence on the reservation in CBM and conventional wells, it was time to develop off the reservation. This was necessary to find new reserves to supplement the now significant volumes produced and to diversify the portfolio of producing assets. Red Willow initially targeted investment options in non-operated opportunities. Eventually we began operating in other states and drilling exploration wells in Colorado. This then developed the company as a fully-fledged exploration and production company.

The first off-Reservation investment began in 2000 with participation in a program of 3D seismic and gas well drilling in South Texas with Contango Oil & Gas Company. In 2001, Red Willow took on its first off-Reservation operations, drilling for oil in the Montana portion of the Williston Basin.

Also in 2001, Red Willow operated its first 3D seismic acquisition project in western Colorado. In 2002, we signed another seismic exploration deal with the Ute Mountain Ute Tribe in western Colorado. Both of these projects resulted in discoveries.

Red Willow "went international" in 2002 when we invested in a company with a large CBM project located in Alberta, Canada. Trident Exploration Company of Calgary, Alberta operated the project. Red Willow’s expertise in CBM operations was a valued contribution to development of the Manville coal resource, a new concept for Canadian companies. We ultimately divested of our interest to Trident in 2006 after significant field production and development was established.

Red Willow expanded its Colorado operations with the purchase of producing properties in the DJ Basin in 2003. The acquisition included leases and 16 producing properties. Over the next few years, Red Willow drilled many development wells targeting the Dakota, J Sand, and the Niobrara. After developing the acreage, we ultimately divested of the properties in 2009.

In 2011, Red Willow began to focus on oil assets. This has led to initiation of operations in resource plays in the Permian Basin of West Texas. The Deepwater Gulf of Mexico program activity also ramped up at this time. The program’s early success led to expansion of leasehold and prospect inventory.

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 we opened an office in Houston, Texas. Expansion of the Gulf Coast program included exploring on shore in Texas and Louisiana. Red Willow was the operator of the wells with Houston Energy as its partner. In 2004, we also 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. As of spring 2013, Red Willow and partners have drilled six discoveries in the greater Mississippi Canyon area. Two of those wells had first production in 2012 and are currently producing at a combined gross rate of over 39,000 BOE per day.

Texas

We expanded our position in Texas in 2004 when we partnered with Browning Oil in the Delaware Basin in West Texas for deep tight gas. Browning was the operator. Expansion of the play to target shallower oil occurred after drilling several marginal deep wells. This commercial play continues to develop and is integral to our strategic plans. In addition to non-operated projects in West Texas, Red Willow has established itself as an operator in both the Midland and Delaware Basins, with 12 wells currently producing and two rigs actively drilling on 50,500 net acres of leasehold in both basins. We also began exploring for pinnacle reef wells in East Texas. In 2005, we drilled our first successful reef well, and drilled some Bossier tests in the area. We now operate 15 wells in the area with significant production.

Panther Energy

As an avenue to additional new plays, the Growth Fund entered an agreement with Panther Energy in 2007. Panther had a successful record of accomplishment as a horizontal drilling operator in Oklahoma in the Hartshorne coal in Oklahoma. Panther’s business plan is to find resource plays to exploit with horizontal drilling. Red Willow has a preferential right to participate with Panther in their plays. Originally, Panther started another Hartshorne horizontal play in Oklahoma that they subsequently divested. The primary area of focus for Panther is in the Anadarko basin horizontal Cleveland sand play. Horizontal drilling of other horizons is occurring in the area. They also explore in other Basins across the western United States.

Future Opportunities

Red Willow actively pursues investment opportunities in both the exploration and exploitation activities. Outside sources and our existing partnerships generate many of these opportunities. We pride ourselves as being a good partner and work hard to maintain our relationships in the industry. We plan to grow in areas that have opportunity and expect the diversification of our investment portfolio to continue. We also have developed an experienced team that is completely competent to explore and operate anywhere in the country. Our strong financial position allows us to be flexible in our investment strategy.