The Wolfcamp Delaware in the western Permian basin is an emerging play that IHS analysts believe has the potential to sustain certain operators through the current oil-price downturn. More companies are entering the Wolfcamp Delaware where the focus is sweet spot identification and delineation.
Unlike the developed Eagle Ford and Bakken plays, the Wolfcamp still has some growing to do to be considered mature, said an IHS Energy Wolfcamp Delaware Review released on June 24.
The Wolfcamp Delaware has some of the best normalized production of any US onshore play, with average peak production rates of 120 boed per 1,000 ft of lateral well drilled, which is nearly double that of the Wolfcamp Midland basin average.
Two early sweet spots are developing in the Central Gas and Southern Liquids subplays. IHS said normalized productivity has increased by more than 40% since early 2013. The Southern Liquids subplay has had more activity, with nearly twice the producing horizontal wells of the Central Gas subplay (127 wells and 60 wells, respectively).
"The Wolfcamp Delaware has promise, but right now, it is considered an adolescent in terms of its maturity," said Reed Olmstead, manager of the North American Supply Analytics Service at IHS Energy, and the principal analyst behind the analysis.
"The sweet spots are still being defined because these normalized production rates have not shown signs of flattening, which means the limits of the play have not yet been fully delineated, and operators are still learning how to best produce from this reservoir," Olmstead said.
As of May, more than 3,200 wells were producing in the Wolfcamp Delaware, with nearly 75% being horizontal wells. Of the total 3,200, more than 475 began production since January 2014.
"Additionally, a very high number of operators-150-have produced from the play to date as compared to fewer than 90 operators in the Eagle Ford shale," Olmstead said. "Despite that high number, you have just two operators who are dominant in the play-Concho Resources and Cimarex Energy, who are delineating and testing the limits of the various sweet spots and production streams of the play."
Concho Resources has been active in the Southern Liquids subplay, while Cimarex has been focused on the Central Gas subplay. Economics for both subplays has proved sufficient for drilling through the oil-price slump, but future delineation and possible expansion might be halted until commodity prices recover.
As a result, IHS expects a good bit of movement as more operators enter the play. Meanwhile some companies will exit for lack of quality assets or the financial stamina to wait for better breakeven prices.
Despite being the major operators there, IHS said Cimarex, Concho, Occidental Petroleum, and Clayton Williams still have relatively low well counts, especially in the subplays, which are expected to drive future production.
While well economics are representative of average historical returns, operators might be able to significantly improve their economics when the play is further delineated and developed.
Occidental's Pres. and Chief Executive Officer Steven I. Chazen, speaking at the IHS Energy CERAWeek 2015 Conference in Houston in April, underscored his company's bullish enthusiasm for the continuing potential of the Permian basin and its subplays.
Technological breakthroughs in energy production anticipated during the next decade could release 10-20 billion bbl of crude from the Permian, he said.
"The potential in the Permian is enormous," Chazen said. "I think we're on the edge of a major revolution in production in the Permian, and 25 years from now, I think the Permian will still be the premier basin."
