Wolfcamp capex is set to exceed $12 billion this year, or 80% of what will be spent in the Bakken, according to a recent report by Houston-based consulting firm Wood Mackenzie.
Wolfcamp ranks third in tight oil spend compared to Bakken and Eagle Ford, but could overtake Bakken for the number two spot by as early as 2017, the company said in its North American key plays analyses.
“Due to the ramp up of rigs in the first and second quarter, we expect capital expenditure to exceed $12 billion in 2014,” said Benjamin Shattuck, upstream analyst, Wood Mackenzie. Wolfcamp crude and condensate production will average 200,000 barrels per day in 2014 and will reach 700,000 barrels per day by the end of the decade.
Wolfcamp is still in its early development phase with less than 10% of total capital spent so far, according to Shattuck, and an influx of new entrants with capital caused Wood Mackenzie to raise its 2015 capex forecast by over $4.3 billion to $13.9 billion. Wolfcamp is now projected to generate nearly $30 billion in remaining value.
The report also found that advancements in stacked pay development are the key driver in the rising acreage value of the Midland Basin.
“There is reason to be cautiously optimistic,” Shattuck said. “While we have seen performance improve across all benches of the Wolfcamp, we are still waiting for an operator to effectively develop multiple benches over a sizeable acreage position.”
According to the report, total Wolfcamp crude and condensate production will grow to average 200,000 barrels per day this year, driven by a rapidly growing rig count and improved results from the northern Midland Basin.