RP Operating is focusing its operations in core blocks like 1 and G with efficient clustering of wells and facilities to optimize production in the Permian Basin. While Block 10 and 12 currently show moderate activity, they are likely positioned for future phased development as the company expands beyond its primary areas. With steady well permitting and infrastructure improvements, RP Operating is well-positioned for measured growth if regulatory delays are minimized.
Given the alignment between leases and facilities and the trends in well permitting, spudding, and completions, RP Operating is likely following a focused operational strategy in the Permian Basin, particularly in the Spraberry Trend Area. This strategy emphasizes co-located facilities to support efficient production.
RP Operating Well. Drilling & Completions Summary
Operational Trends and Future Predictions:
- Increased Efficiency through Facility-Clustered Operations:
- With multiple leases (e.g., FOX, HONEY BADGER, and HABANERO) linked to dedicated facilities (e.g., FOX CTB, HONEY BADGER, and HABANERO CTB), RP Operating may continue optimizing operations by concentrating activities in specific blocks (e.g., Block 1, Block G).
- This clustering of facilities and wells suggests a strategy to minimize transportation and operational costs.
- Continued Growth in Well Development:
- RP Operating has demonstrated a steady pipeline of permits and activities. The average interval of 17–19 days between spudding and completion indicates a well-structured schedule, pointing to consistent well development.
- Given the recent increase in permitting activity in 2024Q2, RP Operating may aim to accelerate production, especially in high-yield areas like Upton and Reagan Counties.
- Compliance and Regulatory Trends:
- If they can streamline regulatory approvals, production could further increase, resulting in more wells coming online faster.
- Near-Term Development Focus:
- Blocks such as Block 1 and Block G will likely see increased drilling activity. These areas have operational support through established facilities (CTBs) and align with the company’s apparent strategy to maximize output in key fields.
- Future Expansion and Optimization Potential:
- RP Operating may seek to expand or repurpose existing facilities, like adding water management solutions or additional CTBs, to handle increased output.
- There is potential for redevelopment programs (refracs or tighter well spacing) in areas like Upton and Reagan, mirroring industry trends.
Outlook for Block 10 & Block 12:
- Block 10:
- Current Activity: Moderate activity suggests that RP Operating has laid some groundwork but has not prioritized it as a key area yet.
- Strategy: Block 10 could serve as a secondary development area, potentially tapped after maximizing production in blocks like 1 and G.
- Expansion Potential: This block could become part of the company’s reserve for future growth or a focus if infrastructure improvements are made.
- Block 12:
- Current Activity: Block 12 has some development but appears to be at an earlier stage compared to primary focus areas.
- Strategy: As RP Operating builds out operations, Block 12 may see phased development, benefiting from nearby infrastructure.
- Long-Term Outlook: Block 12 will likely become a mid- to long-term target once nearby blocks are fully developed or if new efficiencies are discovered.
Conclusion:
RP Operating is positioned for measured growth in the Permian Basin, with efficient coordination between leases and facilities. Blocks 1 and G will remain the primary focus in the near term, but Block 10 and Block 12 offer strategic expansion opportunities. As permitting and well development remain strong, infrastructure improvements in secondary blocks will signal RP’s intent to capitalize on growth in those areas. If regulatory delays can be minimized, production volumes are expected to increase steadily over the next 1–2 years.
