Lilis Energy focuses its oil exploration and development efforts exclusively on the DJ Basin and is headquartered in Denver. The DJ Basin is centered on the eastern side of the Rocky Mountains and extends from south of Denver, Colorado to southeast Wyoming, western Nebraska and western Kansas.

The DJ Basin consists of a large asymmetric syncline of Paleozoic, Mesozoic, and Cenozoic sedimentary rock layers, trending north to south along the east side of the Front Range. The basin started forming as early as 300 million years ago, during the Colorado Orogeny that created the Ancestral Rockies.

Oil and gas have been produced from the DJ Basin since the discovery of oil in 1901 in the fractured Pierre Shale at the Boulder oil field in Boulder County. The DJ Basin currently has more than 20,000 producing oil and gas wells. A U.S. Geological Survey assessment of Niobrara focus areas within the DJ Basin was planned for 2012, with data expected in 2013. The most recent USGS 2002 assessment reported that more than 1.05 billion barrels of oil and 3.67 trillion cubic feet of natural gas, notably from the Wattenberg Field, have been produced, from wells across the Denver Basin Province primarily using conventional, vertical methods. (The USGS Province 39 extends somewhat beyond the DJ Basin.)

The Niobrara has been the focus of recent industry activity in the DJ Basin. Tight oil-bearing reservoir is being targeted in the Niobrara and other prospective Cretaceous formations (e.g. Codell Sandstone, Greenhorn Limestone) due to the favorable economics of pairing new technologies: horizontal drilling with multi-stage artificial stimulation technology.

Recovering DJ Basin Oil with New Technologies

Horizontal drilling and multi-stage artificial stimulation technology, also called hydraulic “fracturing” or “fracing,” are the key enabling technologies that will allow Lilis Energy to unlock original oil from rock formations – generally with target depths of 6,500 – 9,000 feet. While sophisticated geologic and 3D seismic models enhance predictability and reproducibility over larger areas than historically possible, at such depth, there is typically not sufficient porosity and permeability in shaley "unconventional" reservoirs to allow oil and natural gas to flow from the rock into the wellbore at economic rates.

Substantial recoverable oil reserves are believed to exist in previously underexplored formations in the DJ Basin. The advancement of drilling and completion technologies, as well as seismic techniques and continued improvement in understanding of unconventional reservoirs, are integral to the effective and economic exploitation of the prospective multi-horizon hydrocarbon-bearing formations in the DJ Basin.

Horizontal drilling, as opposed to conventional vertical drilling, otherwise known as “long laterals,” are drilled down and sideways to expose more of the well to productive reservoir layers. This technology has been in existence for more than 30 years and was utilized for the horizontal development of Silo field in the 1990s (following discovery in 1981); providing the majority of the production in a field which has produced in excess of 11 million barrels of oil equivalent from the Niobrara formation.

Artificial stimulation technology systems are based primarily on hydraulic fracing, which pumps liquid and proppant into a reservoir under tremendous pressure. This improves permeability by creating and maintaining channels through which hydrocarbons can travel. Cost-effective, high-tech multi-stage fracing completion systems are capable of sequentially fracing specific intervals, stimulating several stages in a single day and substantially increasing near-term production and ultimate recoveries. During the past several years, U.S. producers have greatly improved these techniques in a number of prolific shale plays, increasing both output and efficiency.

As with many major shale plays, the Niobrara play is evolving towards greater definition of potential and lower levels of risk. Lilis Energy’s experienced operations and exploration team is applying the same techniques in an effort to unlock the potential of the emerging Niobrara shale oil play and multiple hydrocarbon-bearing formations in the DJ Basin.