- Rig growth has peaked. Rig count quadrupled in the Wolfcamp from mid-2016, after major M&A deals drove investment in the basin. Growth flattened out in the second half of 2017, and we expect this to stay flat, with less than 10 net rig additions planned in 2018.
- Extended laterals on the rise. Lateral length has increased by an average of 10% since last year to 6,500 feet. As long as the revenue associated with marginal production more than offsets the cost of additional drilling, operators will continue to test lateral length.
Our verdict? Still an attractive play
With the two Delaware basin tight oil plays set to contribute nearly half of Permian crude production by 2025, the Delaware Wolfcamp is still an attractive play, where breakevens reign supreme.
To adapt to slowing growth, we expect operators to shift their focus to maximising value across an entire asset rather than a single well.
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