Capital spending in the Wolfcamp tight oil formation is on track to exceed $12 billion in 2014-making the play the second highest area of investment among US unconventional plays, according to analysis by Wood Mackenzie.
The research and advisory firm expects Wolfcamp production will this year average 200,000 b/d, rising to 700,000 b/d by the end of the decade.
Capital spending across the Wolfcamp is forecast to reach $13.9 billion in 2015 and by 2017 could surpass spending in the Bakken shale.
An increasing rig count and an influx of new companies in the first half of the year are signs that exploration and development activity is picking up in the emerging Permian basin play.
Activity is most pronounced in the Midland subbasin. Wood Mackenzie found that production growth there is outpacing that in the nearby Delaware subbasin, likely due to its higher oil cuts, lower well costs and better supporting infrastructure.
It also found the value of acreage in the Midland subbasin is rising, likely due to advancements in the development of stacked pay zones.
The Wolfcamp shale comprises four benches: The A and B bench correspond to what is known as the Upper and Middle Wolfcamp, while the C bench is often identified as the Lower Wolfcamp. The D bench is frequently referred to as either a part of the Lower Wolfcamp or the Cline shale. Most drilling targets the Wolfcamp B.
Benjamin Shattuck, an upstream analyst for Wood Mackenzie, said well performance is improving in all four Wolfcamp benches. But, he added, "we are still waiting for an operator to effectively develop multiple benches over a sizeable acreage position," he said.
Wood Mackenzie estimates more than 40,000 drilling locations remain in the Midland subbasin.