Wolfcamp investment heats up

Investment: Wolfcamp catching up to Bakken capex

Capital expenditures on the Wolfcamp shale are growing rapidly and spending in the Permian basin play could surpass investment in the prolific Bakken play within three years, according to consultants at Wood Mackenzie.

The Houston-based consultancy estimates that expenditures in the Wolfcamp of West Texas will exceed $12 billion this year. That is about 80% of what companies are expected to spend in the Bakken of North Dakota in 2014, according to WoodMac.

Operators have flocked to the Wolfcamp area of the Permian, enticed by the stacked pay potential of the play.

The Wolfcamp already ranks third among shale basins in attracting investment, after the Bakken and the Eagle Ford. WoodMac expects the Permian play to take over the second spot from the Bakken by as early as 2017.

The Bakken will still likely be outproducing the Wolfcamp by that time, however. The Permian play is expected to average 200,000 barrels per day of oil this year and hit 700,000 bpd by the end of the decade, while the North Dakota play is already pumping north of 1 million bpd.

Still, the Wolfcamp is on the upswing, with less than 10% of total capital spent so far. WoodMac expects companies to spend $13.9 billion there next year, up $4.3 billion from its previous estimate.

"There is reason to be cautiously optimistic,” said WoodMac upstream analyst Benjamin Shattuck. "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."

A WoodMac analysis has shown the B-bench in the southern Midland basin to be the most productive interval to date in the Wolfcamp, followed by the A- and C- benches, respectively.

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