Energen Prepares for 2017 Increasing Budget by Over $100 Million
Energen Corporation (NYSE: EGN) is a pure play operator in the Permian Basin that recently increased its budget to drill more wells this year to grow its inventory of DUCs. The company increased its budget by $100 to $150 million which is expected to be spent in the second half of the year on building the inventory of DUCs. This brings Energen’s total capex in 2016 to $350 to $400 million with $250 to $300 for the Midland Basin and $80 for the Delaware Basin.
Activity Expected to Grow in the Midland Basin During the Second Half of the Year
In the Midland Basin, Energen has around 380,000 net acres with about 2,504 net locations. The company plans to complete 55 wells during the year while drilling 37 to 50 gross wells. Of the wells planed to be drilled this year, 27 to 40 are expected to be drilled in the second half of 2016 to build the DUC inventory. The wells are expected to be completed in 2017.
During the first quarter of 2016, the company completed 33 of the planed 55 wells. Energen is planning to complete another 14 wells in the second quarter completing all of the company’s 2015 DUC inventory in the basin. In 2016 production is forecasted to be 34.2 MBoepd in the Midland Basin with the majority of production coming from horizontal wells. The chart below is showing the distribution of proppant used per well during the first quarter in tons.
Delaware Basin Has Attractive EURs
The company decided to distribute capital into the Delaware Basin because of recent well performance from not only Energen but also surrounding operators. The company estimates that EURs drilled in the core of the Delaware basin could be close to 1.1 MMBoe for a 4,500 foot lateral, 1.5 MMBoe for a 7,500 foot lateral and 2 MMBoe for a 10,000 foot lateral.
The company is expecting to drill 13 to 15 new wells during the year with 8 to 10 being drilled in the second half of the year which will be added to the DUC inventory. The majority of wells being added to the DUC inventory will be 9,500 feet or over laterals. The company is also planning to complete 5 gross wells during the year.
Find out how Energent Group’s Operator Briefings can help you target strategic accounts to stay ahead of your competition. Contact us to get more information and samples.