WoodMac: Wolfcamp spending could surpass that of Bakken by 2017

Activity in the Wolfcamp shale is expanding and, by as early as 2017, could overtake the Bakken in tight oil spending, according to analysis on the West Texas play from Wood Mackenzie.

Wolfcamp capital expenditures are expected to eclipse $12 billion during this year as rigs ramp up, ranking the Wolfcamp third behind the Bakken and Eagle Ford. That total is equal to about 80% of what will be spent in the Bakken this year (OGJ Online, Apr. 2, 2014).

Crude and condensate production from the play is expected to average 200,000 b/d during the year and reach 700,000 b/d by the end of the decade.

WoodMac notes that the Wolfcamp is still in its early development phase with less than 10% of total capital spent thus far. The firm increased the play’s capex forecast for 2015 by more than $4.3 billion to $13.9 billion to account for an influx of new entrants with capital. The Wolfcamp is now projected to generate $30 billion in remaining value.

Serving as a hub of activity has been the Midland basin, where an increase in acreage value is being facilitated through advancements in stacked pay development.

The Midland outpaces the emerging Delaware basin because of higher oil cuts, lower well costs, and better supporting infrastructure, WoodMac says, adding that it expects the basin to drive production for the next 2 decades with more than 40,000 remaining locations.

However, Benjamin Shattuck, WoodMac upstream analyst, says stakeholders should be cautiously optimistic, “While we have seen performance improve across all benches of the Wolfcamp, we are still waiting for an operator to effectively develop multiple benches over a sizeable acreage position.”

WoodMac adds that stacked pay potential has “stoked the flames” of the merger and acquisition market in the Wolfcamp, where the deal market had been dominated by operators making bolt-on acquisitions to grow out positions in established areas.

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