Permian pureplay Diamondback able to increase production

By Luke Geiver | October 03, 2017

Diamondback Energy has proven to be a great example of a resilient shale energy producer. Despite continued stress on oil prices and an extreme weather event to its geographical south, the Permian pure-play shale oil and gas producer has reported that Q3 production is up 10 percent quarter over quarter.

The Midland, Texas-based E&P has now increased its production guidance for the full year by 5 percent. The company continues to execute on growth plans first formed at the beginning of the year, according to Travis Stice, CEO. Now, Diamondback intends to continue growing and perfecting its operations. “We look forward to the Permian Basin continuing to evolve from a basin focused on resource capture to a manufacturing process focused on resource execution,” Stice said.

The operator currently has 9 drilling rigs running in Texas—six rigs are targeting the Midland Basin and three are working in the Delaware Basin. If oil prices stay at $50/b, the company will add one to three rigs. If oil prices increase into the $60/b range, Diamondback could be contracting up to 20 rigs.

Diamondback’s team intends to continue drilling and completing wells in a “balanced” fashion that doesn’t create a large inventory of drilled but uncompleted wells. The focus for the near-term is to implement longer lateral lengths into its Midland and Delaware Basin wells.

At $50/b NYMEX oil prices, the company said that cashflow from a 7,500 foot Midland County Lower Spraberry and Southern Delaware Basin Wolfcamp A wells will pay back a majority of all capital costs in the first year of production.

In the Southern Delaware, Diamondback is working on what it calls high-density-near-wellbore completion designs. The strategy places 2,000 to 2,500 pounds of proppant per foot near the wellbore and uses tighter spacing. In the Midland Basin, Diamondback is running 1,600 pounds of proppant/ft, using 40 to 45 barrels of fluid per foot and also deploying diverting agents.

According to the company, its production segments are seeing an increase after the installation of electronic submersible pumps.

The keep service cost inflation down across its Texas-operations, the company is trying to de-bundle services to maintain better purchasing power.