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Heavy rainstorms that have wreaked havoc on Colorado the past couple of months are still leaving some operators across the Denver-Julesburg (D-J) Basin looking for higher ground.
Heavy rainfall has clearly been felt from the core of the Wattenberg Field to the northeast extension of the Niobrara shale play, said David Tameron, senior analyst, Wells Fargo Securities LLC, in a report. In Weld County, Colo., usually a semi-arid area, roads have been swamped. As recently as June 25, the county was under flood warnings and in the past 60 days rainfall has exceeded norms by up to one foot of rain, according to the National Weather Service.
“As a result, logistical headaches created by road closures, safety precautions and the general difficulty operating in inclement weather hold the potential to buffet second quarter/third quarter production volumes, particularly for those with heavy completion schedules,” Tameron said.
Operators who will feel the effects of current or future road closures in Weld County include Bonanza Creek Energy Inc. (BCEI), Noble Energy Inc. (NBL), Whiting Petroleum Corp. (WLL), Bill Barrett Corp. (BBG) and PDC Energy Inc. (PDCE), he said.
Operators that have announced plans to ramp up production in the D-J Basin, such as Bill Barrett and PDC Energy, might be facing some obstacles due to the recent downpour as well.
Weld County’s annual precipitation ranges from 11.6 inches at Greeley, Colo., to 13.9 inches in the northeastern part of the county, according to Colorado State University.
Though the rainfall has been modest compared to severe flooding in 2013, maintaining production levels in the basin won’t be a breeze, Tameron said.
Wattenberg Woes
Earlier this month, Bill Barrett announced plans to expand and accelerate its extended reach lateral (XRL) drilling program in the northeast Wattenberg area, including an increase in capex guidance to up to $350 million. In total, the company hopes to drill 10 XRLs in Weld County, Colo., during the second quarter.
However, the company’s Weld County acreage is located near the Riverside Reservoir, which has recently been the cause of road closings due to high water levels. The 10 XRLs are located southwest of the reservoir, Tameron said.
The company also recently increased its 2015 production guidance to 6-6.4 million barrels of oil equivalent (MMboe) in conjunction with the announcement of a second D-J Basin rig and at-the-market equity offering. Official guidance for second-quarter production is 1.5 MMboe, he said.
In May, PDC Energy said it turned in-line 20 gross operated wells in the Wattenberg Field during the first quarter. The company has signaled it will double that number in the second quarter, however, it is already behind schedule, he said.
The company has 45 wells scheduled to be turned-in-line in the second quarter, he said. Of those wells, 34 will feature extended reach laterals and will produce into the Aka Energy gas processing system.
At the time of its first-quarter earnings call in May, the company said it had begun flowback on the first Chesnut pad (10-wells) in late April and planned to bring the remaining wells online over the next few weeks. This was roughly one week behind schedule, Tameron said.
At the same time, the company expects to turn-in-line the 16-well Chesnut pad in May/June and the eight-well Churchill pad in early June, he said.
Contact the author, Emily Moser, at emoser@hartenergy.com.
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