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 our 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 our acquisitions.
Coal Bed Methane
Red Willow grew dramatically after the Tribe entered several transactions to monetize
Section 29 tax credits and began to operate our own coalbed methane (CBM) wells in 1995.
Monetizing tax credits was critical to be competitive in coalbed methane wells.
Red Willow took on our first coalbed methane operations out of a bankruptcy that
included wells on Tribal lands. Subsequently, we 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 our first off-Reservation operations, drilling for oil in the Montana
portion of the Williston Basin.
Also in 2001, Red Willow operated our 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 our 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 onshore in Texas and Louisiana.
Red Willow was the operator of the wells with Houston Energy as our 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 2015, Red Willow and partners have drilled ten successful wells in the
greater Mississippi Canyon area. Two of those wells, the Santiago and Santa Cruz
Discoveries, have been on production since 2012 and have produced more than 32 million
gross barrels of oil equivalent (BOE). These wells continue to produce 25,000 BOE
per day gross. In April, 2015 Red Willow and partners brought on line the
Delta House Production Facility which was designed, fabricated, and installed
to handle production from three new Red Willow fields: Marmalard, Niedermeyer, and SOB2.
Seven successful wells have been drilled in these fields. The first three came on
line in April / May, 2015 and are currently producing 32,000 BOE per day gross.
The four other wells are anticipated to begin production prior to 4Q, 2015. In 2012,
Red Willow and partners drilled the discovery well at Big Bend. This field is
expected to begin producing late in 2015.
In addition, we own interest in 30 additional exploration prospects; five of which
are scheduled to be drilled before the end of 2015. The Company continues to explore
for more attractive opportunities to augment the already extensive prospect portfolio.
To that end, Red Willow and our partners were the high bidders on eight new leases in
the most recent federal Central Gulf of Mexico Lease Sale, including
Walker Ridge Block 107 which received the highest bid of any lease. The prospect on that
lease has great upside potential and serves to upgrade an exploration portfolio that
will reach 30 prospects once the Bureau of Ocean Energy Management awards those new leases.
The West Texas Permian Basin, including the Delaware Basin, is considered to be
one of the most active oil and gas areas in the United States. For the last three
years, Red Willow has executed Delaware Basin unconventional shale and tight
sandstone exploration, and development projects through advanced drilling,
completion and production technologies. As operator, Red Willow has drilled
14 horizontal wells targeting Wolfcamp and Bone Spring intervals while investing
in other non-operated projects. Occidental Petroleum Corporation (OXY) and
Concho Resources (CXO) are dominant players in West Texas and have recently
focused their capital investments in the Delaware Basin. We are delighted
to have them as operating partners.
As of April, 2015, Red Willow has participated in 155 vertical and
17 horizontal wells in the Barilla Draw project area operated by OXY.
Our average WI is 34% in 27,654 gross/ 9,398 net acres. Red Willow developed
the Toyah Creek project area, and recently partnered up with CXO.
CXO now operates 20 Toyah Creek producing horizontal Wolfcamp wells.
Red Willow has a 25% WI in 23,056 gross/5,764 net acres in the
Toyah Creek area of mutual interest.
Red Willow and our partners, CXO and OXY, have the unconventional
shale oil knowledge and experience to provide solid production growth
and strong return on investments in the most geologic desirable
sections of the Delaware Basin for years to come.
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.
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