Denver-based Civitas Resources Inc., the largest producer in the Denver-Julesburg (DJ) Basin, has already secured most planned drilling permits for 2022, the management team said recently.
“We’re over 90% permitted for the year,” Civitas’ COO Matt Owens told analysts during the earnings call to discuss first quarter results.
Civitas last year completed its takeover of DJ rivals Crestone Peak Resources, Extraction Oil & Gas Inc. and HighPoint Resources Corp. Civitas has since added 38 permitted locations in the DJ through its purchase of Bison Oil & Gas II LLC.
Civitas on average produced 159,007 boe/d (43% oil, 31% natural gas, 26% NGL) in 1Q2022, up nearly seven-fold year/year from 20,850 boe/d. Full-year production guidance assumes 156,000-167,000 boe/d, 68-70% liquids-weighted.
Civitas has filed two oil and gas development plan (OGDP) locations with the Colorado Oil and Gas Conservation Commission (COGCC). A hearing date is “set in the near future that we expect to be approved unanimously.” Chairman Ben Dell said.
Owens said the company is “working right now on 12 other OGDPs internally. We have submitted six of those also to the state and that includes just over 100 wells.” Two are in technical review, slated for a final hearing in June.
“The other four are in completeness review and those include another 75 wells,” Owens said. “And then we have about another six that we’re working internally for another 100 wells…So, over the next several months, we plan to have…about 220 wells, submitted and hopefully approvals rolling through on various OGDPs that we’re working on…”
The capital spending plan this year earmarks $825-950 million for drilling and completions, running 3.5 rigs and using three hydraulic fracturing crews. Capital spending for 1Q2022 totaled about $235 million, said Dell.
Civitas plans to drill 190-210 horizontal wells (82% stake) this year using a 2.1-mile average lateral length. It plans to complete 165-175 gross wells and bring 155-165 online.
“Our 2022 plan is almost 100% permitted at this point, with the only remaining unpermitted pad scheduled to be spud in the fourth quarter,” Dell said. In 2023, the company’s drilling plans “will largely be permitted once we receive approval” for the comprehensive area plan (CAP).
A CAP would address cumulative impacts and has to be submitted to COGCC. Civitas expects to receive approval for the outstanding CAP in the third quarter, Dell said
Owens noted that it “should be, we anticipate, the first CAP approved under the new rules in the state.”
Average 1Q2022 unhedged sales prices were $89.65/bbl for oil, $4.20/Mcf for natural gas, and $41.68/bbl for NGL.
Operating revenue totaled $817.81 million in 1Q2022, compared with $74.16 million year/year.
Civitas posted net income of $91.64 million ($1.08/share) for 1Q2022, swinging year/year from a $119,000 loss (minus 1 cent).
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