PDC Energy Inc. (NASDAQ: PDCE) closed its $1.5 billion entry into Delaware Basin, the company said Dec. 6.
In the deal, PDC acquired Arris Petroleum Corp. and 299 Resources LLC—two privately held companies managed by Kimmeridge Energy Management Co.—adding a second core operating area to its portfolio.
In total, the acquisition consisted of about 57,000 net acres in Reeves and Culberson counties in West Texas and about 7,500 barrels of oil equivalent per day of current net production from 25 horizontal wells. Two additional wells are currently being completed, the company said.
The company also added midstream assets in the Delaware from the transaction, including 50 miles of gas gathering lines, 30 miles of water disposal lines, five saltwater disposal wells and two fresh water supply wells.
Based in Denver, PDC currently operates a large position in the core Wattenberg Field in the Denver-Julesburg Basin in Colorado. The company's portfolio also includes assets in the Utica Shale in Ohio.
"This acquisition provides us a deep inventory of horizontal drilling locations that complements our existing core Wattenberg position," Bart Brookman, PDC's president and CEO, said in a Dec. 6 statement.
Brookman estimates the company currently has more than 700 horizontal locations on the Delaware acreage in the Wolfcamp A, B and C zones.
"With potential upside through Wolfcamp downspacing, as well as additional potential locations in the Avalon and various Bone Spring horizons, we estimate we may have decades of future drilling locations," Brookman said.
In 2017, PDC expects total capital spend in the Delaware to be nearly $235 million. About $185 million of the company's Delaware budget is allocated to spud 28 wells and turn-in-line 19 wells.
PDC plans to spend about $35 million for leasing, seismic and technical studies with an additional $15 million for midstream and infrastructure related projects. Completions are proceeding on two wells that were spud in September and October, one of which may be turned-in-line before year-end, the company said.
"Our primary plan in the Delaware for 2017 is to focus on holding acreage with two drilling rigs initially and a third rig early in the fourth quarter," Brookman added.
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