New Wells to Hit Moon and Back

[thackney]

New Wells to Hit Moon and Back
https://www.rigzone.com/news/new_wells_to_hit_moon_and_back-30-apr-2019-158716-article/

More than 620,000 miles of new oil and gas wells will be drilled over the next five years, according Rystad Energy’s latest forecasts. That’s enough to get to the moon and back with distance to spare.

The energy research company predicts that the number of onshore and offshore oil and gas wells drilled globally will increase to around 65,000 this year. Activity levels are then forecasted to remain around this level through 2023.

“North America will be in a league of its own thanks to the shale boom. Nearly six in ten new wells on the continent will be drilled in shale basins,” Erik Reiso, head of consulting at Rystad Energy, said in a company statement.

“These wells are typically longer than other supply segment wells. This helps explain why shale wells represent around 80 percent of the distance drilled in North America by 2023,” he added....

[IsailedawayfromFR]

From article

Earlier this month, Rystad Energy revealed that free cash flow for public exploration and production companies “skyrocketed” last year to almost $300 billion.
“For these players, 2019 could turn out to be another blockbuster year,” Rystad Energy said in a company statement at the time.

Seems these types of statements create fodder to tax more heavily oil companies, as well as increasing gasoline taxes, which have been mentioned in the halls of Congress that might be supported by the WH.

Since this is an international-sourced news company, this might explain why it surfaces.

[Idiot]

From article

Earlier this month, Rystad Energy revealed that free cash flow for public exploration and production companies “skyrocketed” last year to almost $300 billion.
“For these players, 2019 could turn out to be another blockbuster year,” Rystad Energy said in a company statement at the time.

Seems these types of statements create fodder to tax more heavily oil companies, as well as increasing gasoline taxes, which have been mentioned in the halls of Congress that might be supported by the WH.

Since this is an international-sourced news company, this might explain why it surfaces.

Quite a few companies are having serious financial trouble trying to make a profit on these long horizontal shale wells in the Permian Basin. 

[thackney]

Quite a few companies are having serious financial trouble trying to make a profit on these long horizontal shale wells in the Permian Basin.

It seems like you need to make your breakeven soon before the price drops or you never reach it with the decline rates.

Permian Leads in Many Ways, Including Rapid Well Declines
https://www.spe.org/en/jpt/jpt-article-detail/?art=4532
22 August 2018

...“For Wolfcamp wells in terminal decline… the most common occurrence is a decline rate of 14% a year,” said Robert Clarke. research director for Lower 48 Upstream at Wood Mackenzie.

Unconventional wells are known for rapid decline rates. Permian wells often produce 40% of the oil and gas they are expected to produce over their lifetime in 36 months, according to the report. But the conventional wisdom has been that sometime after year 5, the decline rate flattens out for a slow, steady decline lasting for decades.

Decline rates of 14% could be a problem because the report authors say estimated ultimate recovery (EUR) calculations are generally based on the 5-10% rule of thumb, with many companies assuming a 5% rate....

[IsailedawayfromFR]

It seems like you need to make your breakeven soon before the price drops or you never reach it with the decline rates.

Permian Leads in Many Ways, Including Rapid Well Declines
https://www.spe.org/en/jpt/jpt-article-detail/?art=4532
22 August 2018

...“For Wolfcamp wells in terminal decline… the most common occurrence is a decline rate of 14% a year,” said Robert Clarke. research director for Lower 48 Upstream at Wood Mackenzie.

Unconventional wells are known for rapid decline rates. Permian wells often produce 40% of the oil and gas they are expected to produce over their lifetime in 36 months, according to the report. But the conventional wisdom has been that sometime after year 5, the decline rate flattens out for a slow, steady decline lasting for decades.

Decline rates of 14% could be a problem because the report authors say estimated ultimate recovery (EUR) calculations are generally based on the 5-10% rule of thumb, with many companies assuming a 5% rate....

14% declines are huge in the terminal decline stage.  Most unconventional reserves are estimated at terminal decline rates of 6 to 7% or less.

If decline rates in terminal decline are indeed in the 14% range generally, then the Permian 'boom' is over before it started.

Typically, terminal decline is not reached for well more than a decade or more, so I wonder where WoodMac is getting that estimate of terminal decline.  The Permian unconventional boom is less than 10 years old.