Permian Basin-focused Diamondback Energy Inc., Midland, Tex., anticipates a 1-3-month break from completions while maintaining its previously cut 2020 capital guidance of $1.5-1.9 billion (OGJ Online, Mar. 11, 2020). On Mar. 19, the company indicated a completions break of 1 month.
Following the break, three to five completions crews are expected to operate and complete 170-200 gross (153-180 net) wells with an average lateral length of 10,000 ft this year, the company said Mar. 31.
The company plans to exit the year’s third quarter operating eight drilling rigs, and exit the year operating seven drilling rigs. Additional cuts could be made should conditions warrant, the company said.
Full year revised 2020 production guidance is 295,000-310,000 boe/d, down from 310,000-325,000 boe/d. Full year revised 2020 oil production guidance is 183,000-193,000 million b/d. The company expects a fourth-quarter 2020 exit rate production guidance of 170,000-180,000 million bo/d (275,000–290,000 boe/d).
Diamondback believes it can maintain the fourth-quarter 2020 exit rate oil production through 2021 with four to five completion crews, six to eight operated drilling rigs, and a capital budget 20-30% less than 2020’s current $1.5-1.9 billion capital budget.
An allocation breakdown of the revised budget was also provided. Drill, complete, and equip (DCE) spend is expected to reach $1.31-1.63 billion, with an additional $100-150 million of midstream capital, and $90-120 million of infrastructure capital.
“A majority of our oil production will flow through the Epic and Gray Oak pipelines beginning in April, where we have both firm transportation on each respective pipeline and associated long-term firm sales contracts tied to the length of our firm transportation commitments. The majority of our remaining oil production, which is currently exposed to the Midland market, is protected in the form of basis hedges. In addition, less than 10% of our current oil production receives West Texas Light pricing,” said Travis Stice, chief executive officer.
