PBIOS - October 2021 - 102

Permian Basin Reports
" We are focusing on what we do best,
and that is operating in the Permian, "
Van't Hof says. " We started as a small
public company in Midland in 2012 with
40,000 acres and 3,000 barrels a day of
production. We now hold well more than
10 times that amount of acreage and have
more than 100 times that amount of daily
oil equivalent production in the basin.
We have come a long way. "
The company is selling its Williston
Basin holdings to focus more at home,
where recent additions in the eastern
Midland sub-basin include ~32,500 net
acres from Guidon Operating LLC and
~49,000 from QEP Resources. Both positions
are mostly held by production,
and increase Diamondback's leasehold
to ~414,000 net Permian acres, of which
over 60% is in the Midland Basin.
Tight Oil Targets
This year, the Midland Basin will
account for 75% of the 210-220 gross
wells the company expects to drill and
265-275 gross horizontal well completions.
Much of the work is in Martin
County, Tx., Van't Hof explains, where
the company is targeting the middle
and lower Spraberry as well as the
Wolfcamp A and B benches, but also
has completed good wells in the shallower
Jo Mill. In the Delaware, the
company is drilling the Wolfcamp A
and B and second and third Bone Spring
in Texas' Pecos and Reeves counties.
Throughout the Permian, Diamondback
is running nine rigs and three simulfrac
crews. Frac designs typically include
1,500-2,000 pounds of proppant and 4555
barrels of fluid per lateral foot.
Average lateral lengths are 10,300 feet,
although Van't Hof reveals the company
has drilled multiple 15,000-foot laterals
and says " an efficient frontier " could be
around 12,500 feet.
Midland Basin initial well productivities
typically average inital production rates
of 2,000-2,500 barrels of oil equivalent a
day, but he says Diamondback looks
chiefly at estimated ultimate recovery
per foot as the defining productivity
metric, and targets wells that produce
70-90 barrels of oil per foot over their
life cycles.
For 2021, the company has increased
overall oil production guidance to 219,000222,000
bbl/d, or 363,000-370,000 boe/d.
Capital expenditures this year are in the
$1.525 billion-$1.625 billion range. Van't
Hof says Diamondback plans to hold oil
production flat for the foreseeable future
with the global oil market still artificially
undersupplied.
" If we are sitting here in a year and
OPEC production has come fully back
on line and oil prices have hung in there
and you see a response on the back end
of the curve, maybe you have a discussion
on production growth, but there are 4
million-5 million barrels of global supply
per day that could be brought back on
the market at any moment, " he observes.
Reducing emissions is a major priority
for Diamondback, Van't Hof remarks,
with strategies to reduce Scope 1 greenhouse
gas intensity by at least 50% and
methane intensity by at least 70% by
2024 (compared with 2019 baseline levels).
Effective Jan. 1, the company generates
no Scope 1 emissions under its " Net Zero
Now " program.
Diamondback continues to cut flaring
and replace combustion equipment, and
is purchasing carbon offset credits, in
addition to spending approximately $60
million over the next four years to replace
gas pneumatic systems with air systems,
and for other strategic emission reduction
initiatives, like increasing the use of forward-looking
infrared (FLIR) cameras
to monitor emissions, Van't Hof details.
" We have realized we can spend some
money, use our balance sheet and get our
emissions numbers down because not
only is it what our investors want but the
right thing for us to do, " he says.
Diamondback Energy is sharpening its position as a pure-play Permian company by allocating
a majority of capital to the high-returning Midland Basin while continuing to
seek attractive bolt-on acquisitions basinwide. Over the past eight years, that strategy
has vaulted Diamondback from a small public company into one of the Permian's largest.
102 THE AMERICAN OIL & GAS REPORTER
Mining Opportunities
Founded by Permian Basin veterans,
Midland-based Admiral Permian Resources
LLC is busy developing and expanding
its Delaware Basin acreage, says
Chief Executive Officer Denzil West.
Since its inception in 2017, Admiral has
amassed more than 25,000 net acres in
the Delaware and boosted production to
more than 15,000 boe/d, he says.
The company has some 10 years of

PBIOS - October 2021

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