(WO) – In its Full Year 2023 financial results, Civitas Resources revealed it increased production in the Permian and DJ basins in Q4 2023. It also unveiled plans to continue drilling momentum at the assets in 2024.
2024 outlook. In the report, the company maintained its previously-provided 2024 production guidance and decreased its estimated 2024 capital expenditures by $150 million. The improvement in capital efficiency is primarily driven by optimized activity levels, enhanced well productivity, and reduced cycle times.
Approximately 60% of total investments are planned to be allocated to the Permian basin, with the remainder to the DJ basin. Civitas expects to drill and complete 130 to 150 gross wells in the Permian basin and 90 to 110 gross wells in the DJ basin. The majority of activity in the DJ basin will be focused in the Watkins area, which is benefiting from higher well productivity.
Q4 2023 results. As compared to the third quarter of 2023, DJ basin sales volumes were up nearly 3% and Permian Basin volumes were higher by 58%. Fourth quarter 2023 Permian basin sales volumes included a full quarter of production from the Tap Rock and Hibernia assets as compared to only two months included in the third quarter of 2023.
Fourth quarter 2023 Permian basin production was impacted by downtime primarily associated with facility upgrades in the Delaware, a higher oil-cut area of production for Civitas. Excluding this downtime, fourth quarter Permian basin volumes would have been approximately 112 MMboed.
The upgrades have been completed and the company’s Permian basin December 2023 production averaged 120 MMboed, 50% of which was crude oil.
Proven reserves. As of Dec. 31, 2023, Civitas had proved reserves of 698 MMboe, a 68% increase from year-end 2022 reserves. The increase from 2022 was primarily driven by the addition of Permian basin reserves associated with the Tap Rock and Hibernia acquisitions.
The company’s year-end 2023 proved reserves were comprised of 273 MMbbl of crude oil, 1,320 Bcf of natural gas, and 205 MMbbl of NGL. 78% of the total proved reserves are proved developed.
“Civitas is a remarkably different company today. As our DJ basin asset continues to outperform, we were successful in strategically expanding our portfolio over the last year by capturing accretive acquisitions that provide us with important scale and diversification in another world-class unconventional basin, the Permian. With a lengthened runway of high-return development opportunities, we are better positioned today to create sustainable, long-term value for our shareholders. Our 2024 outlook builds on the momentum we created over the last year as our premier asset base provides us with more flexibility in our capital allocation and higher certainty in our outcomes. Our focus in 2024 is clear: maximize free cash flow, return cash to owners, and maintain our strong balance sheet,” said CEO Chris Doyle.
