$750 Million CapEx split between Wattenberg and Delaware
Wattenberg producer PDC Energy (ticker: PDCE) reported first quarter results on May 5, showing net income of $46.1 million, or $0.70 per diluted share. This significantly outperforms the $71.5 million net loss in Q1 2016 or the $55.6 million loss in Q4 2016.
Average sale price up 73%
First quarter production was 6.65 MMBOE, an increase of 45.5% over the 4.57 MMBOE PDC produced in Q1 2016. The commodity price recovery makes this increase even more meaningful, as PDC’s weighted average sale price increased 73% from $16.49/BOE in Q1 2016 to $28.53/BOE in Q1 2017. The company expects to continue to grow at a rapid pace, with total production growing from the current average of 73.9 MBOEPD to 105 MBOEPD by the end of the year.
Next up: Delaware basin
PDC will devote considerable spending to developing its newly acquired Delaware basin properties, spending $290 million out of a total budget of $750 million. The company now owns 62,500 net acres in the Delaware, where it is operating three rigs currently. In total, PDC expects to spud 31 wells in the Delaware this year, primarily in the Eastern portion of its acreage. While most of PDC’s wells in the Delaware have only been active for a short period, preliminary results show several wells outperforming the acquisition type curve.
Source: PDC Investor Presentation
PDC owns 95,500 acres in the Wattenberg, and plans to spend $465 million developing this asset this year. The company will spud 139 wells in the play this year, with an average lateral length of 6,800’.the company’s extended reach lateral wells, wells with lateral lengths around 9,500’, are outperforming the 1.1 MMBOE type curve in recent development. PDC reports that these XRL wells cost $4.5 million and have significantly over 100% IRRs.
Source: PDC Investor Presentation
Midstream capacity in the Wattenberg continues to increase for both oil and gas, with about 440 MMcf/d of expansions expected by mid-year 2019. Current planned construction of oil processing is expected to be more than sufficient through at least 2020.
