Centennial drops capital budget 28%, plans four-rig Delaware basin program in 2020
For 2020, Centennial Resource Development Inc., Denver, plans to reduce its capital budget 28% compared to 2019 and expects to reduce its operated rig program to four from the current five in April. Assuming planned activity levels and current commodity prices, the company is targeting crude oil production growth of 3% during the year.
Of the fiscal year 2020 total capital budget of $590-$690 million, total drilling and completion (D&C) costs are expected to be $490-550 million. Some $90-120 million is earmarked to facilities, infrastructure, and other, with the remaining $10-20 million to be spent on land.
Beginning in this year’s second quarter, Centennial expects to operate three rigs in Reeves County, Tex., focused in the Upper Wolfcamp A and Third Bone Spring Sand zones, while continuing to develop and test additional zones. The remaining operated rig and associated D&C capital will be allocated to Lea County, NM.
The company expects to spud and complete 65-75 wells (gross) with an average lateral length of 7,300-8,000 ft.
2019
Centennial reported 2019 net income of $15.8 million compared to $199.9 million in the prior year. For the fourth quarter, net income was $9.6 million compared to $31.0 million in the prior year period.
Fourth quarter crude oil production increased 7% to 45,031 b/d of oil compared to the prior quarter. For the full year 2019, average daily oil and total equivalent production volumes increased to 42,692 b/d and 76,072 boe/d, or 23% and 25% compared to 2018, respectively.
The company developed Delaware basin acreage through multi-well pad co-development, including production from nine separate intervals in 2019.
In Reeves County, Tex, the Bodacious unit (88% WI) was drilled using a stacked-staggered pattern in the Third Bone Spring Sand and Upper Wolfcamp A intervals with 6,200-ft laterals. The two-well pad achieved an average initial 30-day production rate of 1,797 boe/d, or 1,304 b/d of oil.
The Lucy Prewit pad (100% WI) consisted of three wells targeting the Upper Wolfcamp A interval. Drilled with an average lateral length of 6,800 ft, the wells achieved an average initial 30-day production rate of 1,744 boe/d (83% oil) and averaged 214 b/d of oil per 1,000 ft of lateral per well, producing over 130,000 cumulative bbl of oil during the period. The three-well Nicholas pad (average 90% WI), also targeting the Upper Wolfcamp A interval, was drilled with 9,800-ft laterals and achieved an average initial 30-day production rate of 1,865 boe/d (72% oil).
In Lea County, NM, the four-well Airstream 24 State Com pad (91% WI) was drilled using 900-ft spacing in the Second Bone Spring Sand interval with average 10,200-ft effective laterals. The wells averaged 1,843 boe/d, or 1,529 b/d of oil, for the initial 30-day production period.
Four Lea County Duck Hunt wells (average 59% WI) were completed in the First, Second, and Third Bone Spring Sand and Second Bone Spring Shale intervals. These wells were drilled with an average effective lateral length of 7,200 ft and averaged 1,683 boe/d (85% oil) for the initial 30-day production period, or 199 b/d of oil per 1,000 ft of lateral per well.
Total capital expenditures incurred for the year were $891.8 million. During 2019, D&C capital expenditures incurred were $691.4 million. Centennial’s facilities, infrastructure, and other totaled $162.0 million for the year, with an additional $38.4 million spent on land.