Permian Basin pure-play Energen Corp. has boosted its full-year production guidance by almost 6% because of continued strong well results using advanced drilling designs.

The Birmingham, AL-based independent increased its 2017 output estimate to 70,200 boe/d, 5.9% higher than a previous forecast. Year/year production growth should be 29%, compared with an earlier estimate of 21%. Capital expenditures remain unchanged at $850-900 million.

What’s made the difference is the Generation 3 hydraulic fracture (frack) design, based on results through the first two months of the quarter.

“As we observe the wells turned to production in the second quarter, we continue to achieve excellent results attributable to our Generation 3 frack design,” said CEO James McManus. “With early results from these wells, we now have data on the impact of Generation 3 fracks in all key areas of our 2017 drilling and development program.”

Energen works in the three major sub-basins of the Permian, with the Midland responsible for most of the production at an average 31,800 boe/d during 1Q2017. The Delaware contributed 12,800 boe/d during 1Q2017, with the Central Basin Platform (CBP) contributing 8,300 boe/d. Full-year output from the Midland is expected to average 38,800 boe/d, while the Delaware should add around 23,500 boe/d and the CBP contributing 8,000 boe/d. Energen in February had said it planned to run a six- to seven-drilling rig program this year, more than doubling its Delaware output.

Oil production should contribute the most to the production profile, with full-year output averaging 44,900 boe/d, while natural gas should contribute around 13,200 boe/d, and natural gas liquids another 12,100 boe/d.

Management also is feeling more optimistic about the future. In late May activist hedge fund investor Corvex Management LP disclosed it had taken a 5.5% stake in Energen; it also called for the possible sale of the company.

With input from financial advisers J.P. Morgan and Tudor Pickering Holt & Co., the board reviewed its strategic alternatives “and unanimously concluded that the best way to enhance shareholder value is continued execution of the company’s business plan,” management said.

The strategic review “took into consideration input from numerous shareholders and analyzed Energen’s top-tier assets, its improving execution, and the broader macroeconomic and commodity price environment,” management said.

“Over the last several years, Energen has taken decisive actions to reduce leverage, enhance operating margins, and position the company as a pure-play Permian Basin oil and gas exploration and production company,” said McManus.

“At the same time, we have remained focused on further optimization of well performance and returns through continued evolution of frack designs and well spacing across multiple formations. We continue to drive enhanced returns through operational efficiency, as demonstrated by significant declines in our per-unit expenses.”

Energen, he said, “is committed to maintaining both a robust dialogue with its shareholders and an open mind with respect to value creation opportunities, now and in the future.”

The largest increase in quarterly guidance at 14% is expected in 2Q2017, as wells completed using Generation 3 fracks are to be turned to production. In the third quarter, 30 gross and 29 net wells are to be turned inline, while in the final three months, 32 gross/29 net wells should be turned to sales. The 4Q2017 exit rate now is expected to be 53% higher year/year; prior guidance was 47%.