Relationship between CrownQuest Operating, LLC and CrownRock, L.P.
CrownQuest entered into an administrative support agreement with CrownRock, L.P. at the time of CrownRock’s formation in 2007. Substantially all of the time of CrownQuest’s employees is allocated to the operation of CrownRock’s properties and the provision of general and administrative services to CrownRock. In addition, CrownQuest operates approximately 99% of CrownRock’s total net wells, and the wells CrownQuest operated for CrownRock provided approximately 99% of CrownRock’s average daily production in 2022.
CrownRock, L.P. is an independent oil and natural gas company engaged in the acquisition, development and exploration of oil and natural gas properties. Our assets are located in Texas, New Mexico and Utah, and our operations are primarily focused on the development of our core Permian Basin assets. We were organized as a limited partnership in February 2007 by affiliates of our management team and Lime Rock Partners IV, L.P., a private equity fund focused on the oil and gas industry.
CrownRock’s core properties, and therefore the properties which CrownQuest operates, consist of approximately 94,000 net acres in what we consider to be some of the best acreage in the Permian Basin of West Texas, specifically, the Midland Basin. This is where we are focusing primarily on drilling horizontal targets on multiple benches. The Permian Basin of West Texas is characterized by an extensive production history, predominately oil-focused drilling targets, extensive infrastructure, wells with long reserve lives and multiple producing horizons. The Wolfberry play is a modification and extension of the Spraberry play, while the Wolfcamp and Spraberry shale play utilizes horizontal drilling in the historic Spraberry play, the majority of which is designated in the Spraberry Trend Area Field. According to the latest information available from the Energy Information Administration of the U.S. Department of Energy (the “EIA”), the combined Permian Basin Wolfcamp/Spraberry/Bone Springs shale play is the largest oilfield in the United States by both proved reserves and production, and the second largest natural gas field in the United States by both proved reserves and production. Based on the returns we have generated through our drilling to date, the number of undrilled locations in our drilling plan, and our observation of the activity and results of other operators in this area, we believe the Midland Basin represents one of the premier oil and natural gas development opportunities in North America.
We have implemented and continue to refine an ongoing optimization program with the goal of maximizing value from development of our acreage position. We collect, and broadly distribute among our technical staff, data on well and completion design, well spacing, and well performance. We encourage active and cross-disciplinary communication and strive to consistently adjust our operations based on observed data.
From October 2007 through December 2014, we primarily focused on drilling vertical wells in the Midland Basin. In January 2015, we initiated our horizontal program, with our first horizontal well coming on line in March 2015. We spent much of 2016 and the beginning of 2017 preparing to accelerate our horizontal activity. This included identifying potential horizontal drilling locations plus identifying optimum spacing between wells, including interval spacing between zones or benches. We believe our horizontal well inventory will be developed most efficiently through full section development, which is the practice of drilling multiple wellbores in a section and completing the wellbores after the multiple wellbores have been drilled.
From the time we started full pad development in 2017, we have continued to refine our development strategy as it pertains to completion design, interwell spacing, and artificial lift. During 2022, we continued our full pattern development and increasing knowledge of our core areas. Through this we enhanced our understanding of reservoir characteristics with respect to vertical spacing between benches and enhanced our strategies on the best methods of combining benches and spacing wells within the various benches. Additionally, we continually focus on optimizing all aspects of our operations including (1) drilling, by increasing our drilling footage per day per rig and decreasing our cost-per-foot through improvements to casing and fluid designs and interval selection; (2) completions, by sustainably reducing costs by optimizing fluid and completion designs and unbundling fuel and sand; and (3) production operations, by optimizing artificial lift techniques and conversions, and maximizing run times. All of these improvements are independent of unit costs, which tend to vary with commodity prices. From January 2015 through December 31, 2022, we have drilled or were drilling 677 gross horizontal wells in the Midland Basin, eight of which were drilled in 2015, 27 of which were drilled in 2016, 52 of which were drilled in 2017, 66 of which were drilled in 2018, 130 of which were drilled in 2019, 128 of which were drilled in 2020, 124 of which were drilled in 2021 and 142 of which were drilled in 2022. Also, during the same period, we have drilled four gross horizontal wells in the area targeting zones other than the Wolfcamp and Spraberry shale play.
Our horizontal drilling results and the drilling results by operators offset to our acreage have led us to further assess our horizontal drilling inventory and expand our horizontal development plan. Our total production of oil and natural gas has grown from 30.1 MMBoe in 2020 to 41.0 MMBoe in 2021 to 49.6 MMBoe in 2022. We believe we will continue to experience significant production growth as we implement our horizontal drilling plan through 2023 and in coming years, maintain the number of horizontal rigs we are running, and increase the percentage of our horizontal wells that are completed and producing.
We believe, based on our analysis of data acquired through our horizontal drilling program during 2015 through 2022 along with the horizontal drilling results achieved by operators offset to our acreage, that multiple benches contained within our acreage may be prospective, which could substantially increase the ultimate hydrocarbon recovery of each surface acre we have leased in the Permian Basin. We believe there are a significant number of horizontal locations on our acreage that will allow us to target the Wolfcamp, Spraberry, Pennsylvanian and Clearfork/San Andres formations.
During the year ended December 31, 2022, we commenced drilling of 142 gross (138.5 net) horizontal Wolfcamp and Spraberry wells in the Northern Midland Basin, of which 53 gross (52.1 net) horizontal wells were completed as producers and 89 gross (86.4 net) horizontal wells were in various stages of drilling and completion at December 31, 2022. Additionally, during 2022 we completed as producers 69 gross (69.0 net) horizontal wells which had been spud during 2021 and were in various stages of drilling and completion at December 31, 2021.
During 2022, CrownRock spent $951.6 million on drilling, completing, and equipping wells. Approximately $25.4 million of that was used to drill 11.9 net and complete 4.9 net vertical wells. The remaining $926.2 million was used to drill 138.5 net horizontal wells at an average length of approximately 11,200 feet and complete and equip 121.1 net horizontal wells at an average lateral length of approximately 10,000 feet. Approximately 38% of our DC&E spending is for drilling.
Although our emphasis is on our horizontal program, we have strategically drilled vertical wells in order to hold acreage to all recognized productive depths, optimize capital returns in our best areas, and assure the continuation of our horizontal program. Since 2007 we have drilled over 1,150 gross vertical wells in the Midland Basin. As of the end of 2022, we have successfully attained a level of held acreage such that we are no longer required to drill vertical wells. The remaining portion of our acreage can be held through our horizontal drilling program. Therefore, we do not currently plan to drill any vertical wells in 2023.
Spade Ranch. We currently have approximately 105,000 net acres in the Spade Ranch property located in Mitchell County, Texas, on the Eastern Shelf portion of the Permian Basin. One lease covering 98% of this acreage can be perpetuated under continuous development provisions by drilling four gross (four net) wells per year. Since shooting a 3D seismic survey over the Spade Ranch in 2013, we have drilled fewer than thirty-five exploratory wells on this large acreage position. This drilling pace has been sufficient to perpetuate our continuous drilling obligation under the lease. During this time, we have had some success and discovered small oil and gas accumulations. We continue to evaluate the associated economics. For 2023, we currently plan to drill four shallow test wells and perform several recompletions to continue to evaluate the economics. This development activity will perpetuate our lease for 2023.