For Permian operators, understanding well spacing is critical to unlocking full stacked-pay potential. Along with horizontal and vertical spacing, operators must understand the impact of inter-zone bench sequencing on well productivity as remaining locations in primary intervals continue to decrease.
Some operators co-develop wells horizontally across one interval, returning several months later to develop the interval directly above or below, usually in a stagger-stacked configuration. A common result of tightly spaced child well development is that the lagged (child) wells underperform as the reservoir has already been partially depleted by pre-existing (parent) well production; this is often exacerbated when the parent wells were completed with high intensities. In contrast, RSEG has also found cases where parent well productivity is more severely impaired than the child well.
FIGURE 1 | Parent Well Degradation Due to Child Inter-Zone Development
Figure 1 demonstrates a scenario where the Wolfcamp B was co-developed in 2017 across a section followed by the Wolfcamp A about nine months later. The lagged wells were drilled ~260 feet above the parent wells and completed with higher proppant intensities. Modeling a type curve using only production prior to child well completions shows that expected Wolfcamp B parent well productivity decreases following child bench development. The current forecast EUR is roughly half of what the well was tracking prior to the Wolfcamp A bench coming online. RSEG believes the large child well completions and tight vertical spacing intensified competitive drainage between the Wolfcamp A and B wells, causing parent well production to fall off steeply. While the impact on the parent bench is more prominent, the child well forecast is also underperforming the standalone well Wolfcamp B type curve, as reservoir energy is likely being rapidly depleted between the competing zones.
As more operators return to previously developed sections to target zones above or below existing wells, not only is the quality of remaining inventory at risk, PDP reserves are also at risk. This phenomenon needs to be considered when valuing assets and companies. This impact highlights another justification for the co-development of benches where no known frac or flow barrier exists.