The Bone Spring and Wolfcamp plays of Delaware Basin are gradually recovering in terms of both well activity and production output as oil prices recover and E&P operators are shifting their focus to premium assets for better return on capital investments. Bone Spring and Wolfcamp plays in the Delaware Basin both show very attractive production performance in the last few years as illustrated in the following charts.
The above chart shows the average monthly oil production of a Bone Spring horizontal well grouped by its first producing year. On average for 2018, 2019 and 2020, a typical well produces more than 1,000 bbl/day in its peak production month (normally the second month since first production).
The above chart shows the average monthly oil production of a Wolfcamp Delaware horizontal well grouped by its first producing year. On average for 2018, 2019 and 2020, a typical well produces more than 850 bbl/day in its peak production month.
Stratas Advisors forecasts both Bone Spring and Wolfcamp Delaware drilling and completion activity to increase faster relatively compared to other major unconventional plays in the US into 2022. And combined with better well performance, we derive the following oil production forecast for these two plays in the Delaware Basin.
Bone Spring Forecast
The above chart shows the oil production(crude and condensate) forecast for the Bone Spring. Supported by more drilling and completions activity since 2020Q3, it is expected that Bone Spring oil output will recover to 2019 peak by mid-2021 and reach 0.7 million bbl/day in 2022H2.
The above chart shows the oil production(crude and condensate) forecast for the Wolfcamp Delaware. Supported by robust drilling and completions activity forecast, it is expected that Wolfcamp Delaware oil output will recover to 2019 peak by the end of 2021 and reach 2.2 million bbl/day by the end of 2022.
In both forecasts, it is assumed that the well completion activity will recover to 2019 levels in 2022 and future new wells can produce similarly to wells that started producing in 2018 to 2020. While based on current data, 2020 wells in both plays seem to have slightly worse performance but we suspect this might be due to some production control due to extreme low prices of oil in 2020Q2. We will continue to monitor well performances as it is a crucial factor in determining future play production forecasts.