FORT WORTH, Texas ─ Despite lower capex and oil prices operators are making headway in the Delaware Basin, a multistacked play prospect recognized for containing large oil fields.

Matthew Hairford, president of Matador Resources, said at Hart Energy’s DUG Permian conference on May 20, “Commodity prices are down, oil is down, gas is down [and] and the attendance at this conference is up, [and] I think that says a lot for our industry. We’re an industry that perseveres. We’re going to power through this thing. We’re going to come out better on the other side.”

Hairford reviewed Matador’s operations; its Permian Basin acreage position and test results; the Wolfcamp, Bone Spring and Rustler Breaks multipay development potential; latest technology; new rig improvements; and artificial lift.

Like most companies in the industry, capex has been reduced for the year. In 2014, capital spending for Matador was $610 million. For 2015, capital spending is $350 million, a 43% reduction in capex. The company had 3.3 MMbbl of total oil production in 2014 compared with 4.1 to 4.3 MMbbl in 2015 (as of May 6). Total natural gas production in 2014 reached 15.3 Bcf, and in 2015 gas production reached 24 Bcf to 36 Bcf (as of May 6).

“In 2012, we had 1.2 million barrels of oil for the year, and in 2015 we’re going to have 4.2 million [barrels of oil production], so a lot of good growth there. We’re up 27% with the oil [production], and natural gas production is up 63%,” Hairford said.

Matador has suspended drilling operations in the Eagle Ford to 95% or better on the acreage it has. “We’ve learned a lot about shales [from the Eagle Ford] that we’re going to bring to the Permian,” he said.

Most of Matador’s acreage is in the Delaware Basin. The company holds 152,370 gross (85,375 net) acres in southeast New Mexico and West Texas. This acreage total includes about 28,994 gross (16,307 net) acres in Matador’s Ranger area in Lea County; 64,513 gross (27,775 net) acres in its Rustler Breaks area in Eddy County; 11,274 gross (7,877 net) acres in its Wolf area in Loving County; and 42,538 gross (29,073 net) acres in its Twin Lakes area in Lea County.

Hairford reviewed the recent test results of the company’s horizontal wells in the Permian. Of note, Matador’s Dorothy White #1H well has 358 Mboe of production, 1,100 Mcf/d of natural gas and 1,050 Mboe EUR in its 15.5 months on production. The company’s Ranger State well, which has been on production for 17 months, has 197 Mboe of production, 200 Mcf/d of natural gas and 650 Mboe EUR.

“Most of the operators in the area are focusing on 2nd Bone Springs, and we think that is a great target as well. The technical team looked at the Wolfcamp B and said, ‘This looks good; let’s try one here.’ So we did that, and that’s our Rustler Breaks well. It’s been on [production] about a year. It’s made 170,000 boe and it’s online to be about 700,000 boe EUR on that well.”

So why did Matador choose the Delaware Basin? “We certainly acknowledge that there are great areas in the Midland and Central Basin Platform,” Hairford said. Many of the staff members at Matador have a lot of extensive experience on the Delaware side “so that helps,” he said, “and you know the old saying, ‘the best place to find oil and gas is where you’ve already found oil and gas.’ There’s been 30 billion barrels of oil produced out of the Delaware Basin.”

The company has identified 1,445 gross (960 net) engineered drilling locations in the Permian. This total includes 224 gross locations in 3rd Bone Springs, 210 gross locations in 2nd Bone Springs, 207 gross locations in Wolfcamp A and 160 gross locations in Avalon.

Regarding latest technology, Hairford said, “One of the things we did that I think is unique to the Permian but not unique to other areas is setting up these rigs for simultaneous operations. What we’ve done is basically rotate the V-door and the catwalk 90 degrees. We can move a frack crew in and start fracking wells while we’re drilling other wells. The reason that is significant here is you can’t do that in the Eagle Ford and other basins where you’re drilling the wells at the same interval.”

Moreover, new rig improvements include a 7,500-psi pressure rating system, with an estimated reduction in drilling time of 15% to 20% in the lateral on Wolfcamp wells. “The 7,500-psi circulating system allows us to run a much more robust downhole drilling system so we’re able to run bigger motors, get a higher penetration rate and knock these days off the well,” he said.

Finally, Hairford briefly touched on artificial lift. “We, like everyone else in the Eagle Ford, thought that we’re going to go down there and those wells are going to flow for some time period and then we’re going to put them on rod pump. Well, what we determined was that didn’t work exactly the way we wanted it to in a 300- to 150- [or] 100-bbl range. So what we’ve done is implemented gas lift, and this gas lift deal has been really big for us,” he said. According to his presentation, benefits of gas lift have included accelerated production, reduced LOE, lower maintenance and it has helped wells recover faster from offset fracks.

Contact the author, Ariana Benavidez, at abenavidez@hartenergy.com.