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Concho to revert to wider well spacing after Dominator project

US shale player Concho Resources is reverting to wider well spacing after a 23-well project in the Delaware sub-basin of the Permian resulted in spacing that was "too tight", writes Julia Martinez

Concho chief executive Tim Leach said the Dominator project, which was completed last quarter ahead of schedule, was "designed to test logistical capabilities and well spacing that was approximately 50% tighter than our current resource assessment".

However, "while initial rates were solid, current performance data indicates that we developed the Upper Wolfcamp too densely," Leach acknowledged in a second-quarter call with analysts.

The company for 2019 set out to understand optimal lateral lengths, completion designs, and more importantly well spacing, Leach said.

Players in the Permian have often been called out for being too optimistic in their production expectations with well pads that are too closely packed together.

"Dominator is the most extreme example where we went 50% beyond kind of our traditional resource spacing," Leach said. "So I would say that in a number of the projects we have this year, and including a couple more coming on in the back half of this year, you're going to see them developed moderately more dense than our resource spacing, but nothing anywhere close to Dominator.”

The pad tested five zones in the Upper Wolfcamp formation, three on the eastern half and five on the western half, but did not yield much of a differentiation between the two sides so far, chief operating officer Will Giraud said.

Leach added that he anticipates reverting to resource spacing of eight wells across in a section after having learned some things about the impact of inner well communication.

In 2020, he also expects to test spacing that is less dense. In the second quarter, Concho also brought online the 18-well Marion Benge project targeting the Spraberry and Wolfcamp zones in the Midland sub-basin.

The company posted a second quarter loss of $97 million, compared to net income of $137 million in the same period last year.

Overall production in the second quarter totalled 30 million barrels of oil equivalent, or an average of 329,000 boepd.

Average crude output hit 206,000 barrels per day, while gas production reached 737 million cubic feet per day.

For the third quarter, Concho expects output to range between 316,000 boepd and 322,000 boepd.

The company averaged 26 rigs during the quarter, and is currently running 11 rigs in the Delaware and seven in the Midland sub-basin with seven completion crews. Concho had averaged 33 rigs in the first quarter of the year.

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