With West Texas Intermediate oil prices breaking below $90 per barrel and in mid-April trying to find a bottom in the upper $80s, it was left mainly to Permian Basin operators to rise above macro concerns over a slowing global economy and offer an upbeat outlook at the recent IPAA Oil & Gas Investment Symposium in New York.

Cimarex Energy Co. spoke enthusiastically about the expansion of its Bone Spring play into Culberson County, where it was seeing “outstanding results” with after-tax rates of return of 50% to 100%, chief executive officer Tom Jordan told attendees. Cimarex began targeting the second Bone Spring after a nearby competitor well had a 30-day initial production (IP) rate of 800 barrels of oil and 4 million cubic feet of gas per day. The first couple of wells by Cimarex have had “quite similar” results. The company now has two rigs running in the play and has drilled half a dozen wells.

With more than 200 potential locations, according to Jordan, the company's Culberson County Bone Spring play offers plenty of running room in an area where drilling has been focused on both the Bone Spring and Wolfcamp formations.

In the Wolfcamp, wells have delivered 34% after-tax rates of return, as completed well costs have come down to $7.2 million from $8- to $9 million in 2012. Wells have had an average 30-day IP of 6.4 million cubic feet equivalent per day, made up of 43% gas, 26% oil and 31% natural gas liquids. Target zones have been mainly Wolf-camp C and D benches to date.

Of an overall 2013 capex budget of $1.5 billion, Cimarex has allocated $900 million to the Delaware Basin, with Culberson County said to be on the verge of “emerging as a key multipay resources area.” Jordan said it was “more than likely” that all five objectives—the Delaware, Bone Spring and Wolfcamp A, C and D benches—would produce at least somewhere on its 100,000-net-acre legacy position. “We're pretty pumped up on Culberson County right now,” he said.

Midland Basin player Approach Resources Inc. was also upbeat as it described plans for a multibench development program in the Wolfcamp along with ongoing well-cost reductions. Having seen some authority for expenditures (AFEs) in the range of $5.4- to $5.5 million, chief executive officer Ross Craft said the company's target well cost of $5.5 million would be reached no later than the end of May.And with more than 2,000 locations in the Wolfcamp A, B and C, the play offers “solid” returns at a $5.5-million AFE and an estimated ultimate recovery (EUR) of 450,000 barrels of oil equivalent.

Having recently added a third rig, Approach is likely to further accelerate activity with a fourth rig early in the second half of this year, once tests on how best to implement its “stacked wellbore” development and tighter well spacing are complete. A three-bench development is possible (A, B and C benches in the Wolfcamp are all “saturated”), but only a two-bench development would “for sure” go ahead, said Craft, noting logs had been collected on A and B benches. With a 100,000-barrel-per-day oil pipeline in place, Approach plans to drill 30 to 40 horizontal wells this year using a conservative three-rig assumption.

Leave it to Pioneer Natural Resources Co., of course, to make the giant leap from micro to macro with estimates that the resource potential in the Wolfcamp B amounts to 22 billion barrels, based on EURs ranging from 450,000 to 1 million barrels and assuming 34,000 potential locations using 140-acre spacing.

Add in the Wolfcamp A and D, plus the Jo Mill, and the potential expands to 50 billion barrels. And this is in the Midland Basin alone; it excludes the Delaware Basin, with its fast-expanding potential in the Bone Spring, Avalon and Wolfcamp.

In the years ahead, Pioneer Natural Resources chief executive Scott Sheffield sees the industry adding more than 100 horizontal rigs to reach 170 rigs in the Midland Basin by 2018. This would include some 50 rigs for Pioneer, split between its southern and northern Wolfcamp areas, up from some 12 rigs currently.

At this activity level, production by the roughly 200 Midland Basin operators is forecast to rise to 2.5 million barrels per day through 2033, up from approximately 450,000 barrels per day currently, with crude take-away capacity rising to similar levels in just the next two to three years. Not bad, says Sheffield, for a field that Time magazine in 1953 labeled the most uneconomic oilfield in the country.

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