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By Billy Hathorn (Own work) via Wikimedia Commons

Wolfcamp investment on the rise

Zachary Toliver | Shale Plays Media

The Permian Basin is already on its way to becoming the top petroleum producing area in the United States, and the money flowing within the Permian Basin brings proof. The Wolfcamp alone is expected to surpass the Bakken in Capital spending by 2017 as more companies invest in the promising Permian.

The Wolfcamp shale play, which is the second-highest producing shale play in the Permian Basin, is on track to exceed $12 billion in capital expenditures in 2014. Capital expenditures, sometimes abbreviated as capex, are funds used by companies to acquire or upgrade physical assets such as property, industrial buildings or equipment. Essentially, capex is money invested to make an area ready for production, and a whole lot of it is going in the direction of Wolfcamp. To put the $12 billion in perspective, this is roughly 80 percent of the capital spending that will take place in the Bakken. The research and consulting organization, Wood Mackenzie, believes that by 2017, Wolfcamp will take the number two spot in tight oil capital spends.

Here are four key findings from Wood Mackenzie’s analysis of the Wolfcamp and Cline plays of the Permian Basin.

  • 200,000 b/d of oil in 2014: Total Wolfcamp crude and condensate production will grow to average 200,000 barrels per day in 2014, an increase of 34% on our last update, driven by a rapidly growing rig count and improved results from the northern Midland Basin.
  • Midland Basin to dominate Wolfcamp production:  The Midland Wolfcamp outpaces the emerging Delaware Wolfcamp due to higher oil cuts, lower well costs and better supporting infrastructure.  With over 40,000 remaining locations, the Midland Basin will drive production for the next two decades.
  • Stacked pay development shows promise:  Much has been learned about the performance of the benches of the Wolfcamp. Tracking the Wolfcamp over time has allowed Wood Mackenzie to distinguish which benches perform best.  In the Southern Midland Basin, where the A-, B-, and C- benches of the Wolfcamp have been most targeted, the B- bench continues to outperform, followed by the A- bench and then the C- bench.
  • M&A market: Progress in stacked pay development has stoked the flames of the M&A market. Until recently, the deal market was dominated by operators making bolt-on acquisitions to grow out positions in established areas. However, 2014 has seen a number of entrants new to the Permian get into the play hoping to cash in on the stacked pay potential of the Wolfcamp.

Check out the original article by from the organization Wood Mackenzie in the Oil and Gas Financial Journal, “Woodmac: Wolfcamp capital spend could exceed Bakken by 2017”

Related: Niobrara production continues to grow

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