During the company's second quarter earnings call, Encana Corp. executives spoke highly of the company's position in the Permian Basin and said they expect to increase both production and free cash flow from the play in the second half. Data from the Railroad Commission of Texas indicates the company is already taking steps to ensure that happens.
When Encana spoke with investors and the media July 31 about the second quarter, Executive Vice President and COO Michael McAllister said the company was producing at a record level of 110,000 barrels of oil equivalent per day in the Permian.
"Our production in the quarter was about 104,000 boe/d … our production is up nearly 20,000 boe/d from the first quarter [average]," McAllister said. "Since 2015, we have grown our production in the basin more than 2.5 times."
Encana put 38 net wells in the Permian on production during the second quarter, and McAllister said the company would run a "flat four-rig program" for the rest of 2019.
"We expect to see continued production growth and free cash flow generation in the third and fourth quarters," the COO said.
The company showed its interest in increased production from the Permian on Aug. 7-8 when it filed 14 different drilling permit requests with the Railroad Commission, Texas' oil and gas regulator. All 14 were approved Aug. 14 and target the same region: the Spaberry trend in the Permian's Midland Basin.
The Spaberry is a fairly deep but oil-rich shale formation. In its permit requests, Encana said it would be drilling horizontal wells at a depth of 10,300 feet. All the wells will be in Upton County, a sparsely-populated county in West Texas.
Encana said it had experienced production success in the Permian through its cube development approach, where the company has used multiple rigs in close proximity to drill into the same or multiple formations concurrently. It appears that will be the case with the 14 wells approved by the Railroad Commission as data indicates they will be short distances apart.
