American Oil and Gas Reporter - June 2024 - 59

SpecialReport: Permian Basin Playmakers
What do those objectives consist of
exactly? According to Raines, Devon
plans to continue to prize accretive benefits,
strategic fits for its portfolio, potential
operating synergies, and the availability
of quality inventory in any acquisition
opportunity. " There has certainly been a
lot of M&A activity in the Permian, and
there is likely more to come, " he insists.
Amid all the big consolidation moves,
Devon remains busy assessing different
horizons. Recently, as the company was
preparing to test the Wolfcamp B interval
for the first time in its Thistle Area in
Lea County, N.M., it was able to incorporate
rock data it had recently acquired
that prompted it to lower the planned
landing depth for the well. The result
was a 30-day initial production rate of
5,900 barrels of oil equivalent a day,
which so far has outperformed the handful
of other Wolfcamp B tests by other operators
in the area.
" That well has been on line for right at
100 days now and we are just starting to
see a decline, " Raines says. " It's a beast. "
Although the deeper Wolfcamp typically
includes higher gas rates, oil and
condensate cuts are strong enough for
Thistle and other areas to compete internally
for capital, he elaborates. More will
be incorporated into future multizone developments
in 2025 and beyond.
" We are in varying degrees of Wolfcamp
B assessment across the entirety of
our position, " Raines explains. " The
Thistle area was one of the more immature
areas, but we feel better about it with the
recent success we have had. "
The company is running 16 rigs and
recently has moved from four completion
crews to three, mostly in New Mexico,
where Devon's inventory is concentrated.
Devon recently brought on the 13-well
Van Doo Dah project in the Cotton Draw
area of Lea County two weeks ahead of
schedule at peak flow rates of 30,000
gross barrels a day from the Wolfcamp
A. Additionally, 30-day IPs on each of
six upper Wolfcamp wells averaged 5,600
boe/d in the Stateline area straddling
Eddy County, N.M., and Reeves County,
Tx., where a land trade enabled threemile
lateral lengths, Raines notes. Recoveries
are projected to exceed 2 million
boe per well.
To accommodate growth, the company
is spending roughly $100 million annually
on field-level gas and water management
infrastructure. Devon also has expanded
its gas processing capacity through key
After evaluating logs on a Wolfcamp B appraisal well, Devon Energy lowered the planned
landing depth at its Thistle Development in Lea County, N.M. The result was a 30-day
initial production rate of 5,900 barrels of oil equivalent a day. The well has been on line
for 100 days and is just starting to show a production decline.
partnerships, and also will benefit from
having 10% of capacity on the 2.5 Bcf/d
Matterhorn pipeline scheduled to come
on line later in the year.
In addition, Raines says Devon's joint
venture with WaterBridge provides significant
optionality for produced water,
and the company is expanding self-generated
power capacity and microgrids
to ensure adequate electric power supply
because of potential shortages in the
basin.
Infrastructure Build-Out
Even as operators all of sizes position
for the future, more than 300 rigs are
turning to the right across the Permian.
As always, there's a bounty of resource
play targets-from the Wolfcamp and
Bone Spring to the San Andres and
Clear Fork-and seemingly every interval
in between.
As it has developed its oil-rich 135,000
net acres in the eastern Midland Basin,
HighPeak Energy Inc.'s commitment to
investing in infrastructure over 3.5 years
has prepared the company for a future
that may include a merger, says President
Michael Hollis.
Among these projects has been water
handling infrastructure for produced water
that now provides 95% of HighPeak's
needs. Horizontal saltwater disposal wells
have been developed to diffuse disposal
and lessen the risk of inducing any seismic
activity, he explains.
A 10-megawatt solar farm that commenced
operation in May reduces operating
costs and emissions with rigs now
powered by solar during the day and the
grid at night, Hollis goes on. Also, modern,
centralized tank batteries on its Howard
County position will require no upgrades
to meet emissions standards and can be
easily expanded.
Early fruits of the build-out include a
26% decline in lifting costs, according to
Hollis. Going forward, incremental investments
as needed will easily accommodate
growth as executives weigh options
for what they insist is one of the largest
available inventories in the Permian.
Hollis says a larger suitor with more
financial resources can easily and quickly
double production, which now averages
50,000 boe/d on a position that is 81%
oil and 90% liquids.
HighPeak's leasehold includes 2,600
drilling prospects. Of that total, 1,150
have a breakeven cost below $50 a barrel,
but that number may fluctuate as the
company assesses the Wolfcamp C, Middle
Sprayberry and other benches beyond
the bread-and-butter Lower Sprayberry
and Wolfcamp A.
Wolfcamp C wells, especially at its
Signal Peak development in southern
Howard County, are expected to have
similar production capacity of more than
60 barrels a foot as the Wolfcamp A at
the same cost, Hollis says.
" Almost all of the Signal Peak area
looks to be prospective of that zone, so
with six wells per section, we could put
JUNE 2024 59

American Oil and Gas Reporter - June 2024

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