PDC Energy Inc. said Monday that it would direct most of its focus next year to Colorado's Wattenberg field and the Permian Basin, laying out a plan for the assets it acquired in West Texas earlier this year that gives it a path to more growth.
The company expects to close the purchase of 57,000 net acres in the Delaware sub-basin this month, saying it would work to integrate those assets into its core by allocating a significant amount of 2017's capital budget to them. CEO Bart Brookman said the company would mostly focus on holding acreage, drilling longer laterals and multi-well pads, and "developing a long-term midstream strategy" in its new play.
PDC expects to spend $725-775 million next year, of which $490 million would be dedicated to the company's core Wattenberg acreage. At the end of last year, the company budgeted just $450-500 million for its entire program. In the Delaware, it plans to spend $235 million, most of which would go toward spudding 28 wells and turning in-line (TIL) another 19, primarily in the Wolfcamp A zone. PDC has allocated $18 million to the Utica, down from this year's budget of $34 million there.
The company announced in August that it would acquire Arris Petroleum and 299 Resources for $1.5 billion to give it a third core area in West Texas. Analysts said its 2017 plans in the state are better-than-expected. Overall, it's guiding for 82,000-90,400 boe/d, or an increase of 40% at the mid-point compared to anticipated 2016 volumes. Next year's production is expected to consist of 43% oil, 21% natural gas liquids and 36% natural gas.
PDC said it would operate a two-rig program in the Delaware for most of next year, with the addition of a third rig planned for 4Q2017. Thirteen of its 19 planned TILs there are expected to have laterals of 10,000 feet. The company also said it would spend $35 million for leasing, seismic and technical studies in the play, and another $15 million for midstream related projects, including gas connections, saltwater disposal wells and surface infrastructure.
In the Wattenberg, PDC plans to run three to four rigs and drill a mix of standard, mid-reach and extended laterals with an average length of 7,300 feet. The company said it would TIL 150 Wattenberg wells.
In the Utica, which the company has turned away from in recent years in favor of an oilier production mix, PDC said it would TIL two wells in Guernsey County and make selective lease renewals.