URTeC: 2697549
Delaware Basin: Seven Year Review of Activity and Performance Kurt Mire*, P.E., James Moomaw*, P.E., Mire & Associates, Inc. Copyright 2017, Unconventional Resources Technology Conference (URTeC) DOI 10.15530-urtec-2017-2697549
This paper was prepared for presentation at the Unconventional Resources Technology Conference held in Austin, Texas, USA, 24-26 July 2017.
The URTeC Technical Program Committee accepted this presentation on the basis of information contained in an abstract submitted by the author(s). The contents of this paper
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Summary
The Delaware Basin is one of the most active drilling areas in the U.S. This review of activity, well performance,
and drilling economics was done using 7 years (2010-2016) of production and completion information8. Normalized
production type curves were developed for the primary Delaware Basin horizontal targets, the Bone Spring Sand and
Wolfcamp Shale. Production and completion information8 from over 6,000 wells were considered along with several
published operator presentations1,2,3,4,5,6,7,9. Select high performing wells were identified and individually forecasted
to identify the top 10 wells for 2016.
Our analysis shows that 1,007 Bone Spring and Wolfcamp wells were spudded and 894 new wells were put on
production in 2016. Anadarko Petroleum, Concho Resources and EOG Resources were the most active operators in
the Delaware Basin. From 2015 to 2016 drilling activity declined in the Bone Spring Sand by 57% while Wolfcamp
Shale activity increased by 9%. Most U.S. shale plays experienced drilling declines of 30% or more in 2016, which
highlights the resilience of the Wolfcamp Shale. See U.S. drilling play data below.
Figure 1. U.S. drilling play summary for 2014, 2015, 2016
New well production rates and reserves have been increasing for the last 6 years. A typical new well drilled in the
Bone Spring Sand should produce about 795,000 barrels of oil equivalent (BOE) over its life and new Wolfcamp
Shale wells should produce 1,116,000 BOE. At current product prices ($50 Oil and $3.10 Gas) and well costs, new
wells should payout in less than 2 years and generate an internal rate of return (IRR) of ~38% from the Bone Spring
Sand and ~52% from the Wolfcamp Shale. Based on initial production rate and reserves per well, Resolute Natural
Resources’ wells in the Wolfcamp Shale were the top performers in 2016.
2014 2015 2016
Wolfcamp Shale - Delaware Basin 761 714 780 9%
Haynesville Shale 256 236 171 -28%
Mississippian Lime - Mid Continent 1,255 629 441 -30%
Wolfcamp / Cline Horizontal - Midland Basin 1,549 1,032 700 -32%
Niobrara Oil - Denver Basin 1,123 805 495 -39%
Marcellus Shale 1,618 921 558 -39%
Utica Shale 628 403 208 -48%
Eagle Ford Shale 4,329 2,274 1,028 -55%
Bone Spring Sand - Delaware Basin 830 522 227 -57%
Bakken / Three Forks 3,064 1,428 543 -62%
U.S. Drilling PlayWells Drilled Change
from 2015
2697549 2
Introduction
The Delaware Basin is located in Southeast New Mexico (Chaves, Eddy and Lea County) and West Texas
(Culberson, Loving, Pecos, Reeves, Terrell, Ward, and Winkler County). See figure 2 below.
Figure 2. Delaware Basin play map (IHS Markit, 2017)
Industry news is frequently headlined by the Delaware Basin, from deals and buyouts to changes in well design and
increasing production. Data shows that the Delaware Basin portion of the Permian Basin did not just survive the
recent downturn, activity in the Wolfcamp Shale thrived. As unconventional resource plays move into a new
paradigm of longer laterals (10,000 ft.+) and more proppant (2,500+ pounds/lateral foot.), the Delaware Basin is
demonstrating world class performance by producing more than 1 million barrels of oil equivalent per day in
December 2016 from the Bone Spring and Wolfcamp. See production and well data graph below in figure 3.
While our review covers the prolific Bone Spring Sand and Wolfcamp Shale, the Delaware Basin is still giving up
secrets in the form of an emerging play called the Alpine High2 which we hope to include in future reviews as
information becomes available.
2697549 3
Figure 3: Delaware Basin production history (Bone Spring and Wolfcamp).
Method
Commercial production and completion data was obtained from IHS Markit (2017) for wells in the Bone Spring and
Wolfcamp horizontal plays. Production type curves normalized to time zero were generated for wells grouped by
producing zone, initial production year, operator and county. Initial production rates were determined for each group
of wells by examining the reported monthly production. Average initial 30-day production rates (IP30) were used as
a benchmark for initial well performance. Hyperbolic decline projections were made for each normalized type curve
to determine average estimated ultimate recovery (EUR). An economic limit of 4 BOPD was used for the EUR
projections. A sample normalized type curve and projection for the 2012 Wolfcamp well group is shown below in
figure 4.
Figure 4: Sample normalized production type curve used to determine IP30 and EUR.
0
2,000
4,000
6,000
8,000
10,000
12,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2010 2011 2012 2013 2014 2015 2016
We
ll C
ou
nt
BO
EPD
Daily Production & Well Count2010 - 2016
BOEPD
Well Count
Sample Type Curve Wolfcamp – 2012 Production Starts 181 Well Sample IP30 636 BOPD & 1,237 MCFD EUR 318 MBO & 1,285 MMCF Average GOR 4,041 SCF/BBL 42 Year Life
2697549 4
Completion details were also compiled for each well group including total proppant and lateral length. Average
values for lateral length and proppant amounts were determined for each well group. The IP30 rates and EURs for
each well group were normalized by dividing by the average lateral length. Initial production rates and reserve
volumes were determined for oil, gas and barrels oil equivalent (BOE). Gas volumes were converted to oil
equivalent barrels using a factor of 6 MCF of gas per barrel equivalent. Natural gas liquids (NGLs) were not
addressed in the rate and reserve estimates but were accounted for in well economics. Some operators report BOE
values by including oil, sales gas (after processing shrinkage) and NGLs.
Annual Performance Trends
Type curves were generated for horizontal wells that reported a start of production from the Bone Spring or
Wolfcamp in each year from 2010 to 2016. Average initial production rate and reserves have increased in nearly
every year. Average lateral length and proppant per lateral foot have increased every year. See annual well results
below in figures 5 through 14.
Figure 5: Bone Spring and Wolfcamp well performance for 2010 – 2016.
Figure 6: New well production starts, seven-year trend.
BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft
2010 120 310 1,209 3,900 512 137 1,344 9,810 361 4,427 474
2011 256 385 855 2,221 528 168 991 5,899 333 4,653 513
2012 423 480 941 1,960 637 223 1,254 5,623 432 4,762 579
2013 638 525 1,082 2,061 705 244 1,250 5,123 452 4,970 578
2014 678 600 1,056 1,760 776 306 1,517 4,958 559 5,227 870
2015 593 605 1,048 1,732 780 399 1,809 4,534 701 5,392 1,2222016 301 761 1,439 1,891 1,001 457 2,028 4,438 795 5,740 1,452
BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft
2010 83 475 994 2,093 641 253 857 3,387 396 4,307 334
2011 136 390 1,300 3,333 607 308 1,076 3,494 487 4,575 456
2012 181 436 1,237 2,837 642 318 1,285 4,041 532 4,709 474
2013 222 429 1,137 2,650 619 355 1,490 4,197 603 5,065 676
2014 405 468 1,738 3,714 758 467 2,532 5,422 889 5,484 1,058
2015 516 506 1,807 3,571 807 531 2,898 5,458 1,014 5,857 1,328
2016 542 695 2,180 3,137 1,058 690 2,557 3,706 1,116 6,523 1,707
Bone Spring Annual Well Performance
Wolfcamp Annual Well Performance
Year WellsInitial Production (IP30) Reserves per well (EUR) Well Design & Completion
Year WellsInitial Production (IP30) Reserves per well (EUR) Well Design & Completion
0
200
400
600
800
1000
1200
1400
2010 2011 2012 2013 2014 2015 2016
Production Starts 2010 - 2016
Wolfcamp
Bone Spring
0
200
400
600
800
1000
1200
1400
2010 2011 2012 2013 2014 2015 2016
Well Type 2010 - 2016
Horizontal
Directional
Vertical
2697549 5
Figure 7: Average lateral length and proppant volumes by year.
Unconventional well completion trends in the Delaware Basin shifted noticeably, with longer laterals and more
proppant each year. Proppant volumes have greatly accelerated since 2014, more so for the Wolfcamp. Lateral
length tracks this trend with the greatest increase in lateral length seen in the Wolfcamp. Average lateral length for
2016 was 5,740 ft for Bone Spring and 6,523 ft for the Wolfcamp wells. The average proppant loadings in pounds
per lateral foot for 2016 were 1,452 for the Bone Spring and 1,707 for the Wolfcamp.
Figure 8: Average proppant per lateral length 2010 – 2016.
0
2
4
6
8
10
12
2010 2011 2012 2013 2014 2015 2016
Mill
ion
lbs.
Total Proppant2010 - 2016
Average per well
BONE SPRING
WOLFCAMP
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
2010 2011 2012 2013 2014 2015 2016
Feet
Lateral Length2010 - 2016
Average per well
BONE SPRING
WOLFCAMP
0
200
400
600
800
1000
1200
1400
1600
1800
2010 2011 2012 2013 2014 2015 2016
Pro
pp
an
t lb
s. /
ft
of
late
ral l
engt
h
Proppant per Lateral LengthAverage per well
2010 - 2016
Bone Spring
Wolfcamp
2697549 6
Figure 9: Well performance for 2010 – 2016 in the Bone Spring.
Figure 10: Well performance for 2010 – 2016 in the Wolfcamp.
400
500
600
700
800
900
1,000
1,100
300 400 500 600 700 800 900
IP30
(BO
EPD
)
EUR (MBOE per well)
Bone SpringWell Performance
2010 - 2016 2016
2012
2014
2015
2013
2010
2011
600
650
700
750
800
850
900
950
1,000
1,050
1,100
300 400 500 600 700 800 900 1,000 1,100 1,200
IP30
(BO
EPD
)
EUR (MBOE per well)
WolfcampWell Performance
2010 - 2016
2015
2014
2013
20122010
2016
2011
2697549 7
Figure 11: Normalized EUR by year for Bone Spring wells, well count in parentheses.
Figure 12: Normalized initial rate by year for Bone Spring wells, well count in parentheses.
70
80
90
100
110
120
130
140
150
400 600 800 1,000 1,200 1,400 1,600
EUR
(M
BO
E) /
1,0
00
ft
late
ral l
engt
h
Proppant (lbs) / ft lateral length
Bone SpringEUR vs. Proppant
2011 (256)
2010 (120)
2012 (423)
2013 (641)
2014 (678)
2015 (593)
2016 (297)
110
120
130
140
150
160
170
180
400 600 800 1,000 1,200 1,400 1,600
IP3
0(B
OEP
D)
/ 1
,00
0 f
t la
tera
l len
gth
Proppant (lbs) / ft lateral length
Bone SpringIP30 vs Proppant
2011 (256)
2010 (120)
2012 (423)
2013 (641)
2014 (678)
2015 (593)
2016 (297)
2697549 8
Figure 13: Normalized reserves by year for Wolfcamp wells, well count in parentheses.
Figure 14: Normalized initial production rate by year for Wolfcamp wells, well count in parentheses.
80
90
100
110
120
130
140
150
160
170
180
200 400 600 800 1,000 1,200 1,400 1,600 1,800
EUR
(M
BO
E) /
1,0
00
ft
late
ral l
engt
h
Proppant (lbs) / ft lateral length
WolfcampEUR vs. Proppant
2016 (542)
2015 (516)
2014 (405)
2013 (222)
2012 (181)
2011 (136)
2010 (83)
2697549 9
County Summary
Well performance was analyzed for each county that had new Bone Spring or Wolfcamp wells in 2016. This
included 2 counties in New Mexico (Eddy and Lea) and 6 counties in Texas (Culberson, Loving, Pecos, Reeves,
Ward and Winkler). It should be noted that Chaves County, New Mexico and Terrell County, Texas are part of the
Delaware Basin and have had Bone Spring or Wolfcamp activity in past years. For 2016, the wells with the highest
average reserves were drilled in Culberson County, Texas. See well performance data by county in figures 15
through 20.
Figure 15: 2016 horizontal well performance by county.
Figure 16: 2016 horizontal well performance by county for Bone Spring and Wolfcamp.
BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft
Culberson 16 800 3,200 4,000 1,333 415 4,074 9,817 1,094 5,485 998
Eddy 90 725 1,475 2,034 971 512 2,084 4,070 859 5,735 1,324
Lea 126 845 1,400 1,657 1,078 485 2,356 4,858 878 5,695 1,607
Loving 28 600 1,400 2,333 833 435 1,816 4,175 738 5,480 1,544
Reeves 21 775 1,350 1,742 1,000 603 1,261 2,091 813 7,122 1,744
Ward 15 200 530 2,650 288 180 301 1,672 230 4,845 676
BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft
Culberson 41 525 3,900 7,429 1,175 1,027 7,232 7,042 2,232 6,772 1,959
Eddy 47 725 3,300 4,552 1,275 689 4,712 6,839 1,474 5,779 1,880
Lea 41 1,450 2,600 1,793 1,883 760 1,880 2,474 1,073 5,092 2,211
Loving 180 550 760 1,382 677 759 2,142 2,822 1,116 6,072 1,549
Pecos 31 635 750 1,181 760 529 829 1,567 667 7,855 1,995
Reeves 161 625 2,075 3,320 971 909 3,917 4,309 1,562 7,216 1,645
Ward 28 645 1,125 1,744 833 516 1,236 2,395 722 7,118 1,795
Winkler 13 725 800 1,103 858 1,105 1,373 1,243 1,334 6,390 1,623
County WellsInitial Production Rates (IP30)
County WellsInitial Production Rates (IP30)
Well Design & Completion
Well Design & Completion
2016 - Bone Spring Well Performance by County
2016 - Wolfcamp Well Performance by County
Reserves per well (EUR)
Reserves per well (EUR)
200
400
600
800
1,000
1,200
1,400
200 300 400 500 600 700 800 900 1,000 1,100 1,200
IP3
0 (B
OE
PD
)
EUR (MBOE per well)
2016 Bone SpringPerformance by County
Reeves
Eddy
Loving
Ward
Lea
Culberson
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
600 800 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400
IP30
(BO
EPD
)
EUR (MBOE per well)
2016 WolfcampPerformance by County
Lea
Culberson
Eddy
Reeves
Loving
Ward
PecosWinkler
2697549 10
Figure 17: 2016 Bone Spring normalized reserves vs proppant by county. Well counts in parentheses.
Figure 18: 2016 Bone Spring normalized IP30 rate vs. proppant by county. Well counts in parentheses.
0
50
100
150
200
250
600 800 1,000 1,200 1,400 1,600 1,800 2,000
EUR
(M
BO
E) /
1,0
00
ft
late
ral l
engt
h
Proppant (lbs) / ft lateral length
2016 Bone SpringEUR by County
Ward (15)
Culberson (16)
Eddy (90)
Lea (126)
Loving (28) Reeves (21)
50
100
150
200
250
300
600 800 1,000 1,200 1,400 1,600 1,800 2,000
IP3
0(B
OP
ED)
/ 1
,00
0 f
t la
tera
l len
gth
Proppant (lbs) / ft lateral length
2016 Bone SpringIP30 by County
Ward (15)
Culberson (16)
Eddy (90)Lea (126)
Reeves (21)Loving (28)
2697549 11
Figure 19: 2016 Wolfcamp normalized reserves vs proppant by county. Well counts in parentheses.
Figure 20: Normalized initial rate by operator for 2016 Wolfcamp wells, well count in parentheses.
50
100
150
200
250
300
350
400
1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300
EUR
(M
BO
E) /
1,0
00
ft
late
ral l
engt
h
Proppant (lbs) / ft lateral length
2016 WolfcampEUR by County
Culberson (41)
Eddy (47)
Loving (180)
Lea (41)
Pecos (31)
Ward (28)
Reeves (161)
Winkler (13)
50
100
150
200
250
300
350
400
1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300
IP3
0(B
OP
ED)
/ 1
,00
0 f
t la
tera
l len
gth
Proppant (lbs) / ft lateral length
2016 WolfcampIP30 by County
Lea (41)
Eddy (47)
Culberson (41)
Pecos (31)Loving (180)
Ward (28)Reeves (161)
Winkler (13)
2697549 12
Operator Summary
Fifty-four operators brought on new wells in 2016. The most active operators were Anadarko Petroleum, Concho
Resources and EOG Resources. Bone Spring and Wolfcamp type curves were made for each operator. Initial
production rates were estimated and EURs were projected using hyperbolic decline analysis. Completion details
were compiled for each operator. See operator results in figures 21 through 30.
Figure 21: 2016 Bone Spring and Wolfcamp horizontal well performance.
BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft
Anadarko 16 750 1,500 2,000 1,000 509 944 1,855 666 4,565 536
BTA 7 1,050 2,043 1,946 1,391 522 1,963 3,761 849 4,809 1,988
Chevron 29 731 1,800 2,462 1,031 388 2,072 5,340 733 5,509 1,106
Cimarex 14 1,050 3,200 3,048 1,583 433 3,218 7,432 969 5,081 1,567
Concho 59 855 1,660 1,942 1,132 538 1,986 3,691 869 6,205 1,585
Devon 38 629 1,223 1,944 833 411 1,236 3,007 617 5,741 1,263
EOG 25 1,135 1,938 1,707 1,458 549 2,391 4,355 948 5,165 2,003
Matador 6 1,070 1,450 1,355 1,312 430 1,018 2,367 600 6,246 2,477
Mewbourne 24 846 1,272 1,504 1,058 556 1,117 2,009 742 5,471 1,358
Oxy 16 1,270 1,500 1,181 1,520 645 1,420 2,202 882 5,933 1,311
BOPD MCFD GOR BOEPD MBO MMCF GOR MBOE avg lat len avg # prop/lat ft
Anadarko 91 500 1,650 3,300 775 889 1,819 2,046 1,192 6,732 1,334
Apache 15 665 1,947 2,928 990 664 2,434 3,666 1,070 5,499 1,532
BHP Billiton 24 744 2,813 3,781 1,213 669 2,538 3,794 1,092 5,911 1,154
Brigham 11 591 625 1,058 695 627 488 778 708 7,590 1,683
Centennial 11 786 2,822 3,590 1,256 377 2,183 5,790 741 6,049 1,861
Cimarex 26 800 4,084 5,105 1,481 1,275 3,392 2,660 1,840 8,844 2,131
Concho 22 829 3,086 3,723 1,343 756 3,598 4,759 1,356 6,878 2,211
Conoco 9 586 2,441 4,166 993 638 2,443 3,829 1,045 6,252 1,492
EOG 68 1,510 3,015 1,997 2,013 885 2,092 2,364 1,234 5,581 2,173
Halcon 12 450 700 1,556 567 522 984 1,885 686 8,476 1,982
Jagged Peak 10 1,033 1,137 1,101 1,223 1,348 1,371 1,017 1,577 10,228 2,069
Matador 27 771 3,306 4,288 1,322 527 2,365 4,488 921 5,241 2,467
Mewbourne 24 625 3,105 4,968 1,143 549 3,525 6,421 1,137 5,855 1,574
Oxy 9 1,100 1,450 1,318 1,342 867 1,416 1,633 1,103 6,315 1,566
Parsley 8 1,043 1,687 1,617 1,324 530 686 1,294 644 7,776 2,280
Resolute 12 1,286 3,772 2,933 1,915 1,438 4,741 3,297 2,228 8,994 1,455
RKI 25 601 2,433 4,048 1,007 400 1,709 4,273 685 5,104 1,448
RSP 13 725 1,309 1,806 943 608 1,173 1,929 804 6,013 1,648
Shell 41 225 825 3,667 363 300 998 3,327 466 6,361 1,289
Silver Hill 7 825 1,180 1,430 1,022 781 998 1,278 947 6,104 1,833
Well Design & Completion
2016 Bone Spring Well Performance by Operator
Well Design & Completion
2016 Wolfcamp Well Performance by OperatorReserves per well (EUR)
Operator WellsInitial Production Rates (IP30)
WellsInitial Production Rates (IP30) Reserves per well (EUR)
Operator
2697549 13
Figure 22: Horizontal well production starts in 2016 by operator.
Figure 23: Bone Spring average proppant (2010 – 2016) for the most active operators.
0
20
40
60
80
100
120 2016 Production Startsby Operator
BONE SPRING
WOLFCAMP
0
2
4
6
8
10
12
14
16
18
Mill
ion
lb
s. P
rop
pan
t
Bone Spring Average Total Proppant per Well2016 Most Active Operators
2010
2011
2012
2013
2014
2015
2016
2697549 14
Figure 24: Wolfcamp average proppant (2010 – 2016) for the most active operators.
Figure 25: 2016 Bone Spring well performance by operator.
0
2
4
6
8
10
12
14
16
18
20M
illi
on
s lb
s. P
rop
pan
tWolfcamp Average Total Proppant per Well
2016 Most Active Operators2010
2011
2012
2013
2014
2015
2016
500
550
600
650
700
750
800
850
900
950
1,000
800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600
IP30
(BO
EPD
)
EUR (MBOE per well)
2016 - Bone SpringWell Performance
by OperatorEOG
BTA
Oxy
Cimarex
Concho
Devon
Mewbourne
Chevron
Anadarko
Matador
2697549 15
Figure 26: 2016 Wolfcamp well performance by operator.
Figure 27: Normalized reserves by operator for 2016 Bone Spring wells, well count in parentheses.
60
80
100
120
140
160
180
200
500 1,000 1,500 2,000 2,500 3,000
EUR
(M
BO
E) /
1,0
00
ft
late
ral l
engt
h
Proppant (lbs) / ft lateral length
2016 - Bone SpringEUR by Operator
EOG (27)
BTA (7)
Matador (6)
Cimarex (14)
Concho (72)
Devon (38)
Anadarko (16) Oxy (21)
Mewbourne (24)Chevron (29)
2697549 16
Figure 28: Normalized initial rate by operator for 2016 Bone Spring wells, well count in parentheses.
Figure 29: Normalized reserves by operator for 2016 Wolfcamp wells, well count in parentheses
100
150
200
250
300
350
500 1,000 1,500 2,000 2,500 3,000
IP3
0(B
OEP
D)/
1,0
00
ft
late
ral l
engt
h
Proppant (lbs) / ft lateral length
2016 - Bone SpringIP30 by Operator
Anadarko (16)
Cimarex (14)
Oxy (21)
Matador (6)
Concho (72)
Mewbourne (24)
Chevron (29)
Devon (38)
BTA (7)
EOG (27)
50
100
150
200
250
300
1000 1200 1400 1600 1800 2000 2200 2400 2600
EUR
(MB
OE)
/ 1
,000
ft
late
ral l
engt
h
Proppant (lbs) / ft lateral length
2016 - Wolfcamp
EUR by Operator
Resolute (12)
Matador (27)
EOG (68)
Cimarex (26)
Concho (23)
Shell (41) Parsley (8)
JaggedPeak (10)
Halcon (12)
BHP (24)
RKI (25)
Anadarko (91)
Brigham (11)
Centennial (11)
Silver Hill (7)
RSP (13)
Mewbourne (24)Apache (15)
2697549 17
Figure 30: Normalized initial rate by operator for 2016 Wolfcamp wells, well count in parentheses.
The top performing wells for 2016 were determined using estimated IP30 and projected EUR. IP30 rates as high as
3,800 BOEPD and well EURs as high as 3,500 MBOE were observed. Nine of the top ten wells were completed in
the Wolfcamp Shale. EOG Resources operates half of the top ten wells. Several of the top wells had lateral lengths
of over 10,000 feet and proppant loads as high as 2,468 pounds per lateral foot. Lea County, New Mexico had 5 of
the best wells. See top ten list in figure 31.
Figure 31: Top 10 performing wells from 2016, sorted by EUR (MBOE).
Drilling Economics
A look at typical drilling economics for the Bone Spring and Wolfcamp wells gives a glimpse into what is
motivating activity in the basin. We used current commodity prices and well costs. Our analysis shows what
average 2016 Bone Spring and Wolfcamp wells will produce and allows us to estimate initial oil and gas production
rates, decline rates, hyperbolic factors, total reserves and expected well life. The Bone Spring and Wolfcamp type
curves for the Delaware Basin are shown below in figure 32 and 33.
50
100
150
200
250
300
350
400
1000 1200 1400 1600 1800 2000 2200 2400 2600
IP3
0(B
OEP
D) /
1,0
00 f
t la
tera
l len
gth
Proppant (lbs) / ft lateral length
2016 - Wolfcamp
IP30 by Operator
Resolute (12)
Matador (27)
EOG (68)
Cimarex (26)
Concho (23)
Shell (41)
Parsley (8)
JaggedPeak (10)
Halcon (12)
BHP (24) RKI (25)
Anadarko (91)
Brigham (11)
Centennial (11)
Silver Hill (7)
RSP (13)Conoco (9)
Oxy (9)Mewbourne (24)
Lateral Prop
BOPD MCFD BOEPD MBO MMCF MBOE Len (ft) # / Lat Ft
Cimarex Vagrant 38 A 3H Wolfcamp Culberson 1,200 4,350 1,925 2,168 8,170 3,529 10,554 2,178
Resolute South Goat 2 Unit 2204h Multi Wolfcamp Reeves 1,760 4,200 2,460 2,376 5,919 3,362 10,104 1,681
EOG Leghorn 32 State 201H Bone Spring Lea 2,500 5,700 3,450 1,999 5,500 2,916 4,933 2,416
Resolute South Mitre 2 Unit 2102H Wolfcamp Reeves 1,631 4,389 2,362 2,177 4,311 2,896 9,918 1,447
EOG Rattlesnake 21 Federal Com 701H Wolfcamp Upper Lea 3,015 5,114 3,868 1,766 3,661 2,376 7,839 1,776
Resolute North Mitre Wolfcamp Unit 2101H Wolfcamp Reeves 1,934 5,192 2,799 1,573 4,409 2,308 10,096 1,480
EOG Rattlesnake 28 Federal Com 704H Wolfcamp Upper Lea 2,319 4,652 3,094 1,789 2,859 2,266 Not Rpt 17 MM #
Apache Blue Jay Unit P103H Wolfcamp Loving 2,107 5,592 3,039 1,337 3,430 1,908 5,843 1,248
EOG Rattlesnake 21 Federal Com 702H Wolfcamp Upper Lea 2,731 5,447 3,639 1,287 2,629 1,726 7,843 1,806
EOG Orrtanna 20 Federal 701H Wolfcamp Upper Lea 2,394 5,096 3,243 1,211 2,577 1,641 4,910 2,468
Prod ZoneWell Name CountyOperatorInitial Production - IP30 Reserves per well (EUR)
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Figure 32: Bone Spring production type curve used to generate drilling economics.
Figure 33: Wolfcamp production type curve used to generate drilling economics.
To estimate current well costs we researched published data. This included operator and government reports that
projected well costs for 20176. We used a drilling cost of $115 per foot and a completion cost of $610 per foot of
horizontal lateral length. 2016 averages for total depth and lateral length were determined for the Bone Spring Sand
(15,064 ft. TD) and the deeper Wolfcamp Shale (17,237 ft. TD) and were used to estimate 2017 well costs. Lease
and facilities costs were also considered. Well operating expenses were estimated from industry data and ranged
from $18,000 per month plus $1.00 per barrel declining over time to $4,000 per month plus $1.00 per barrel. We
used a lease net revenue interest of 80%. Product price differentials were estimated using available data to be -10%
for oil and +20% for gas (includes NGL value). Constant product prices of $50.00 per barrel and $3.10 per MCF
were used. Discounted cashflow projections were made to generate net present value (10%), internal rate of return
2016 Bone Spring Type Curve IP30 761 BOPD & 1,439 MCFD EUR 457 MBO & 2,028 MMCF Well Life 47 Years
2016 Wolfcamp Type Curve IP30 695 BOPD & 2,180 MCFD EUR 690 MBO & 2,557 MMCF Well Life 55 Years
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(IRR) and payout. Economic projections show that typical Wolfcamp Shale wells have greater net present value
(NPV10) than a typical Bone Spring Sand well. See summary in figure 34.
Figure 34: 2017 drilling economics summary.
Conclusions
• Wolfcamp drilling increased in 2016 while Bone Spring drilling activity declined by 57%.
• Delaware Basin production significantly increased in 2016, exceeding 1 million BOEPD.
• IP30 rates and EURs increased for the last 5 years, linked to longer laterals and more proppant.
• Bone Spring wells show modest 2016 increase in EUR / 1000 ft. lat. but had a large increase in IP30 / 1000 ft.
lat.
• Wolfcamp wells’ 2016 EUR / 1000 ft. lat. is similar to 2015, but saw a dramatic increase in IP30 / 1000 ft. lat.
• Culberson County wells had the highest EUR and IP30 in the Bone Spring for 2016.
• Lea County had the highest IP30 while Culberson County had the highest EURs in the Wolfcamp for 2016.
• Matador, EOG and Concho used the most proppant per well in 2016 for the Bone Spring.
• Cimarex, Concho and Matador used the most proppant per well in 2016 for the Wolfcamp.
• Cimarex, EOG, BTA and Oxy had the highest EUR and IP30 per well in 2016 for the Bone Spring.
• Resolute, Cimarex, Jagged Peak, Concho and EOG had the highest EUR per well in 2016 for the Wolfcamp.
• Anadarko appears efficient with 2016 proppant loading given EUR results in the Bone Spring.
• Cimarex, EOG and BTA appear to have optimized 2016 reserves and proppant volumes in Bone Spring wells.
• Resolute, BHP, Apache, Mewbourne, Anadarko appear efficient with 2016 proppant, Wolfcamp EUR results.
• EOG and Matador had the highest IP30 / 1000 ft. lat. in 2016 for the Wolfcamp.
• Typical 2017 Bone Spring well: NPV(10) of $4.1 million, IRR of 38%, EUR of 795 MBOE.
• Typical 2017 Wolfcamp well: NPV(10) of $7.4 million, IRR of 52%, EUR of 1,116 MBOE.
• Delaware Basin drilling activity reflects current economics; good for Bone Spring, very good for Wolfcamp.
Lease cost 240,000$ Lease cost 240,000$
Drilling 1,732,360$ Drilling 1,982,255$
Completion 3,506,280$ Completion 3,979,030$
Facilities 100,000$ Facilities 100,000$
Total Well Cost 5,578,640$ Total Well Cost 6,301,285$
NPV(10) 4,154,100$ NPV(10) 7,405,200$
Payout (yr) 1.9 Payout (yr) 1.5
IRR 38% IRR 52%
2017 - New Well Costs & Economics
Bone Spring Wolfcamp
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References
1. Anadarko Petroleum Corporation. (2017). Fourth-Quarter Operations Report. [Powerpoint slides].
Retrieved from Anadarko website http://investors.anadarko.com/quarterly-
results?item=13#assets_9:618
2. Apache Corporation. (2017). Scotia Howard Weil 2017 Energy Conference. [Powerpoint slides].
Retrieved from Apache website
http://files.shareholder.com/downloads/APA/4767974396x0x934687/EF0B3BE8-4515-4947-
90AC-3B21CA9F1892/17-0327_Howard_Weil_vFINAL.pdf
3. Cimarex. (2017). Scotia Howard Weil 2017 Energy Conference. [Powerpoint slides].
Retrieved from Cimarex website http://ir.cimarex.com/phoenix.zhtml?c=254117&p=irol-
presentations.
4. Concho Resources. (2017). Howard Weil 45th Annual Energy Conference. [Powerpoint slides].
Retrieved from Concho website
http://s2.q4cdn.com/413021264/files/doc_presentations/2017/mar/2017.03.26-(Final)-Howard-
Weil-Presentation.pdf.
5. Devon Energy. (2017). Scotia Howard Weil Energy Conference. [Powerpoint slides].
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http://s2.q4cdn.com/462548525/files/doc_presentations/2017/DVN-Howard-Weil-Presentation-
032717.pdf
6. Energy Information Administration (EIA). (2016). Trends in U.S. Oil and Natural Gas Upstream Costs.
[Industry Overview]. Retrieved from EIA website
https://www.eia.gov/analysis/studies/drilling/pdf/upstream.pdf.
7. EOG Resources. (2016). EOG Resources, 4Q 2016. [Powerpoint slides].
Retrieved from EOG website http://investors.eogresources.com/Presentations-and-
Events?item=53
8. IHS Markit. (2017). Oil & Gas Production- Delaware Basin- 2010 through 2016- Well Data. [Statistics].
Retrieved from US Production Data.
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Retrieved from Matador website
http://investors.matadorresources.com/phoenix.zhtml?c=248247&p=irol-presentations
