Is it debutante time for the Delaware?

The basin was the belle of the ball at Hart Energy’s DUG Permian conference in Fort Worth in May, where it became evident that the Delaware Basin is coming of age in the cotillion of unconventional oil plays.

Operators are pushing geologic delineation into the southern Delaware Basin in Reeves and Pecos counties, Texas, while optimizing completion techniques. This effort includes longer laterals and greater proppant loading along both sides of the Texas/New Mexico border, where the Wolfcamp Shale is increasingly a focal point for operators.

Meanwhile, the industry is expanding midstream infrastructure in one of the more sparsely populated areas of the U.S., opening opportunities for additional development.

Think of the Permian Basin as a butterfly-shaped oil province with two opposing wing-shaped sub-basins bordering the Central Basin Platform. The Delaware is the western wing in this image. The Midland and Delaware basins date to early Permian times, when a collision of continental plates joined the South and North American land masses. Subsequent basin downwarping to the north followed the tectonic train wreck, and both the Delaware and the Midland experienced recurring episodes of filling and subsidence correlating to the four main Wolfcamp Shale targets—the Wolfcamp A, B, C and D formations. Later, eroded sediment was transported across a shelf-slope environment and is identified today as Bone Spring in the Delaware and as Spraberry in the Midland.

It is a fascinating geologic narrative. Today’s remarkable Delaware Basin oil and gas story is apparent in a sample of 1,000 wells drilled from second-quarter 2015 through first-quarter 2016. State records show 44% of those wells targeted the Wolfcamp Shale, 20% Bone Spring and 11% Wolfbone, the commingled play involving the Bone Spring and Wolfcamp in Reeves County, Texas.

State records show more than 19% of wells listed as wildcats, primarily in Lea and Eddy counties, New Mexico. Allocating those wells proportionately implies operators favored the Wolfcamp in 51% of Delaware Basin wells over the past year, followed by the Bone Spring at 23%, or a 2-to-1 Wolfcamp bias.

Although the Delaware well count dropped from 260 or more per quarter in 2015 to 230 in 2016, the Delaware Basin held its own nationally when compared to activity reductions in the Bakken, Eagle Ford and Marcellus plays.

Ever wonder what a difference a year makes? In the Delaware Basin, it amounts to a seismic shift in geologic targeting. Bone Spring drilling remained steady at a little more than 20% of Delaware Basin wells in 2015 before dropping to 11% of the well count in first-quarter 2016. Operators targeted the Wolfcamp Shale in 40% of wells drilled in the last three quarters of 2015 but increased the Wolfcamp share to 57% of wells in first-quarter 2016.

Capital deployment illustrates the industry’s changing perspective. Wolfcamp drilling expanded by 43% in Loving County, Texas, and by 50% in Culberson County, Texas, during first-quarter 2016. Both counties border New Mexico, facing one another across the Pecos River.

But it is a different 2016 story for the Bone Spring, where the first-quarter well count dropped 60% in Lea and Eddy counties, New Mexico. The most representative example is Devon Energy Corp., which decreased Bone Spring drilling from 13 wells per quarter in 2015 to just two year to date, all in Eddy County, New Mexico.

Loving County, Texas, is among the least populated counties in the U.S. Yet the county typifies the Delaware narrative. The Bone Spring well count fell 50% in first-quarter 2016 via cutbacks at Apache Corp. and EOG Resources Inc. Still, Apache’s Loving County Wolfcamp effort increased from one well per quarter in 2015 to 11 during first-quarter 2016.

Five operators—Anadarko Petroleum Corp., EOG Resources Inc., BHP Billiton Ltd., Shell Western and Concho Resources Inc.—represented 60% of Delaware Basin Wolfcamp wells in the last three quarters of 2015. Their market share fell to 55% when the well count increased during first-quarter 2016. However, Cimarex Energy Co. and Apache Corp. joined the top five Wolfcamp operator ranking, displacing Concho and Shell Western.

Regardless of suitor, rising Wolfcamp interest suggests a full dance card for the Delaware Basin in 2016.

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