Energen Corp. said it plans to run a six- to seven-drilling rig program and spend $790 million on capital expenditures (capex) in 2017, and expects production in the Delaware Basin, a sub-basin of the Permian, to more than double during the year.

In a statement Friday, the Birmingham, AL-based exploration and production (E&P) company said the $790 million will be spent on drilling and development. More than half of the capex budget ($440 million) will be devoted to drilling in the Midland sub-basin, while $345 million will be spent in the Delaware sub-basin and the remaining $5 million in the Central Basin or elsewhere.

Energen said it plans to drill 96 gross (83 net) wells in 2017, and will complete 124 gross (112 net) wells during the year, including 61 gross (60 net) of the horizontal drilled but uncompleted (DUC) wells in its inventory at the end of 2016. It plans to exit 2017 with 33 gross DUC wells.

According to a slide presentation outlining the company’s drilling program for 2017, Energen plans to drill and complete 59 gross (50 net) horizontal wells in 2017. Of those, 34 gross (27 net) will be in the Permian’s Midland sub-basin while 25 gross (22 net) will be in the Delaware sub-basin. Of the aforementioned DUC wells left over from 2016, Energen plans to complete 44 gross (43 net) wells in the Midland sub-basin and 17 gross (17 net) Delaware wells.

The company also plans to drill seven gross (six net) vertical wells in the Midland sub-basin in 2017, and complete four gross (three net) of them.

Of the 33 gross DUC wells Energen estimates it will have at the end of 2017, 22 gross (20 net) will be horizontal wells in the Midland sub-basin, eight gross (seven net) will be horizontal wells in the Delaware sub-basin, and three gross will be vertical wells in the Midland sub-basin.

Production totaled 54,600 boe/d in 2016, Energen said. Broken down by play, production was 35,300 boe/d in the Midland sub-basin — including 26,500 boe/d from horizontal wells and 8,800 boe/d from vertical ones — 10,300 boe/d in the Delaware sub-basin and 9,000 boe/d in the Central Basin and elsewhere.

The E&P expects production to increase 20.3% overall, to 65,700 boe/d in 2017. Energen added that production could reach 100,000 boe/d in 2019, even with no assumed uplift from its Gen 3 frac design. But the largest increase in 2017 is expected in the Delaware sub-basin, with production climbing to 21,100 boe/d, a nearly 105% increase.

“That’s going to be a really big growth area for us next year,” CEO James McManus said of the Delaware sub-basin during a conference call Friday to discuss 4Q2016. He later added that Energen is not currently performing a lot of delineation.

“We feel really good about what we’re drilling,” McManus said. “We’re drilling in zones that we feel are going to be productive, and that we’ve got pretty good data and information around. That’s particularly true in the Delaware Basin, where we’re going to stick in Reeves and Loving County [TX] for the most part, although there could be a few exceptions to that. But we will be drilling in the north up in Martin County [TX] and in Glasscock County [TX].

“We feel that we’ve got really good data, really good knowledge. I don’t see a lot of delineation risk in terms of the fact that we might not get the production we want. We’re really honed in on moving forward, really more on development.”

During the Q&A portion of Friday’s call, COO John Richardson concurred with McManus’s assertion that the company hasn’t experienced any takeaway issues in the Delaware and Midland sub-basins, and believes that there is still sufficient capacity through 2019.

“From a macro standpoint, for the carriers that we use, we see plenty of capacity,” Richardson said. “It may tighten some, but we think that there is going to be capacity there from where we are micro. We’re in really good areas that have really good takeaway, particularly in the Midland Basin. And we work with the people who are old carriers…to make sure about that capacity and to inform them of our plans. We expose our budget to them early on in the process, so they can plan.

“In the Delaware, we’ve actually added takeaway capacity and have a little more flexibility there with some new systems coming in and we were sort of a first mover on some those systems. So we’ve really got a little more option and being focused and sort of concentrated in the Delaware has really helped us there.”

Energen reported an adjusted net loss of $54.5 million (minus 56 cents/share) in 4Q2016, compared with an adjusted net loss of $590.8 million (minus $7.50/share) in the year-ago quarter. For the full-year 2016, the company reported a net loss of $167.5 million (minus $1.77/share).