New old west Texas oil fields are industry's latest glamour pin-ups

— Some of industry's biggest oil companies which just a handful of years ago were vying to see who had the biggest North American natural gas portfolios, continued to ramp up their oil and liquids operations in the third quarter -- and some of their choicest plays were to be found in the Permian Basin.

Companies such as Devon Energy, Anadarko Petroleum and Pioneer Natural Resources can't say enough about the superior results they've harvested from west Texas Permian wells, particularly in the Spraberry field and the Bone Springs field, which also straddles southeast New Mexico. For example, Scott Sheffield, CEO of Pioneer, called the Spraberry the "shining" star of its third-quarter operations, while a smaller operator, Cimarex Energy, characterized its Permian program as "outstanding."

The Permian is the latest example of a decades-old oil-prone field that was once considered ho-hum by investors but is now enjoying a revival -- gussied up and glamoured owing to elevated oil prices coupled with vastly improved extraction technology. With oil climbing past the mid-$80s/barrel level, the plays there have already provided a cash windfall for exploiters. And they're just getting started.

Two emerging but prominent Permian fields are the Bone Springs, which also comprises the Avalon Shale (also called the Leonard Shale) and the Wolfberry Trend underneath the Spraberry. Early drilling results from those areas have turned enough heads that it seems a significant list of E&P industry players are mulling entry into the fields. Even lenders are smiling more on liquids plays than gas. Operators are boasting increased per-well oil volumes and greater drilling efficiencies, proving not only that an old dog can be taught new tricks, but that he can be made to fetch multiple bones in record time.

A handful of years ago, technologies such as horizontal drilling and especially multi-stage fracturing and longer laterals began to yield breathtaking amounts of gas from wells at a time everyone seemed to be chasing gas. But the technologies soon became their own worst enemy, producing so much gas that gas prices tanked. Gas is seen as an iffier proposition these days because there's so much of it, so its price remains persistently low while oil and liquids have climbed onto the commodity throne.

As a result, not only has the Permian been been financially rewarding, but drilling there has begotten still more drilling and uncovered more potential targets. In the Barnett Shale gas shale field around Fort Worth, Texas, where horizontal drilling was first widely used, companies chased a single formation around 8,500 feet deep. But in West Texas, operators are finding what is known as "stacked pays" of several separate hydrocarbon layers at varying depths. As a result, some fields offer not just one zone to probe, but several. Stacked pays are not unique to the Permian, but have been found in a few emerging plays there.

For example, Pioneer, which has exploited the Spraberry for years at around 6,000-8,000 feet, is now gung-ho about another zone several hundred feet below it called the Wolfberry, and is even gearing up to explore the still-deeper Strawn formation below 10,000 feet which it calls the Strawberry.

Meanwhile, operators also hint at still other potential plays in the region they're probing but aren't ready to unveil just yet. With improved well completion techniques, stacked pays and impressive rates of return, the future of west Texas drilling promises a thrilling ride in the years ahead.