PDC Energy Inc. again plans to invest heavily in its Denver-Julesburg (DJ) Basin properties in northeastern Colorado this year, as it continues to delineate its position and tweak completion designs in the Permian Basin of West Texas.

The company announced last month a plan to cut year/year spending by 15% to $810-870 million in 2019 for a program that’s forecast to increase production by  20% to 46-50 million boe. PDC expects to spend 60% of its capital this year in the DJ’s Wattenberg field, where it plans to spud 135-150 wells with a three rig program and turn-in-line (TIL) 110-125 wells.

PDC produced  40.2 million boe in 2018, or 110,000 boe/d, up 26% from 2017. The Wattenberg accounted for 84,000 boe/d last year.

The company also saw a 32% year/year gain in oil production of 17 million bbl, as it’s focused on wetter production since entering the Permian’s Delaware sub-basin about two years ago. West Texas is to receive the remainder of PDC’s capital this year, where the company plans to spud 25-30 wells with a two-and-a-half rig program and TIL 20-25 wells. Delaware volumes averaged 26,000 boe/d in 2018, increasing from 21,000 boe/d in 1Q2018 to nearly 31,000 boe/d in 4Q2018.

This year’s plans should set up PDC to spend $825-925 million in 2020, when it again expects to grow annual production by 15-20%, according to its preliminary outlook.

In the Delaware, PDC continues to test methods in the various Wolfcamp Shale intervals. It plans to modify its completion design in the sub-basin by slightly reducing the amount of proppant per foot, while increasing the average distance between completion stages to help lower well costs.

The company dropped a completion crew in the Delaware in October. Combined with the timing of third-party gas processing expansions in Colorado, the company said those factors would likely lead to a sequential decline in 1Q2019 production before volumes begin to steadily grow through the rest of the year. 

The midstream constraints PDC wrestled with in Colorado last year began to ease as 2018 came to a close. COO Scott Reasoner said last week during a call to discuss year-end earnings that a new processing plant brought online by DCP Midstream LLC helped lower line pressure in the Wattenberg, which helped push up production.

PDC produced 11.8 million boe during the fourth quarter, up 36% from the year-ago period and 17% from 3Q2018.

The company reported fourth quarter net income of $178.9 million ($2.71/share), compared with $77.6 million ($1.17) 4Q2017.

Management said 4Q2018 results included a $264 million impairment for the Delaware leasehold. Reasoner said the company’s position in the play, primarily in Culberson County, TX, declined from 51,000 acres to 42,000 acres when leases expired. The land has “a pretty immaterial impact” to the company’s core areas. The Delaware operations are focused in parts of Culberson and Reeves counties.

For the full year, PDC reported net income of $2 million (3 cents), compared to a net loss of $127.5 million (minus $1.94) in 2017. Revenue increased to $1.5 billion from $921.6 million over the same time.