EIA now provides estimates of drilled but uncompleted wells in major production regions

[Smokin Joe]

EIA now provides estimates of drilled but uncompleted wells in major production regions

http://www.pennenergy.com/articles/pennenergy/2016/09/eia-now-provides-estimates-of-drilled-but-uncompleted-wells-in-major-production-regions.html?eid=288225004&bid=1528727
 September 14, 2016
By PennEnergy Editorial Staff
Source: U.S. Energy Information Administration
Starting this month, EIA's Drilling Productivity Report (DPR) includes monthly estimates of the number of drilled but uncompleted wells (DUCs) in the seven DPR regions. Estimates will go through the prior month; the September DPR includes estimates through August.

Current EIA estimates show DUC counts as of the end of August totaling 4,117 in the four oil-dominant regions (Bakken, Eagle Ford, Niobrara and Permian) and 914 in the three natural gas-dominant regions (Haynesville, Marcellus and Utica) that together account for nearly all U.S. tight oil and shale gas production. In the oil regions, the estimated DUC count increased during 2014 and 2015, but the count declined by about 400 over the past five months. The DUC count in the gas regions has generally declined since December 2013.

DUCs are wells that have been drilled by producers, but have not yet been made ready for production. The full completion process involves casing, cementing, perforating, hydraulic fracturing, and other procedures to make the well ready to begin producing oil or natural gas. Following the large decline in oil prices since mid-2014, new drilling and completion activity slowed, and the number of DUCs in oil-dominant regions increased. A high inventory of DUCs has implications...> snip<

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http://www.pennenergy.com/articles/pennenergy/2016/09/eia-now-provides-estimates-of-drilled-but-uncompleted-wells-in-major-production-regions.html?eid=288225004&bid=1528727

[MajorClay]

Looks like a total of 5000 DUC's in the US as of 31Aug.  Rig Count was at 508 last week.  It is going to take a while to work through the back log.  At 42 dollars a bbl it might take 2 years to work through.

[Smokin Joe]

Looks like a total of 5000 DUC's in the US as of 31Aug.  Rig Count was at 508 last week.  It is going to take a while to work through the back log.  At 42 dollars a bbl it might take 2 years to work through.

I don't have all the numbers to plug in, but I think the rigs drilling are mostly just maintaining the DUC numbers in more mature plays, even as wells are being completed. That would depend on the rate of completions. Often the completions are as or more expensive than drilling the well, but in some areas there is a time limit on how long production can be delayed. The situation puts downward pressure on frac providers rates if (and only if) the companies are leaving second and subsequent wells on a multiwell pad as DUCs and producing from the initial well to hold the lease.

If it was my call, with a major player, I would be installing production equipment at fire-sale prices, getting labor and services at lower, more competitive rates, and waiting on the actual completions for the other wells on the pad until prices went up. I'd have some frac crews busy just to be on the list when the rush started, and push to complete when the price started up or reached a profitable threshold. That comes from watching companies like Exxon continue to drill during low price periods to have product to take to market when prices go back up. If you don't have production to sell, you can't take advantage of price swings.

Smaller companies might do the same on a smaller scale, depending on financial health.

[IsailedawayfromFR]

If it was my call, with a major player, I would be installing production equipment at fire-sale prices, getting labor and services at lower, more competitive rates, and waiting on the actual completions for the other wells on the pad until prices went up. I'd have some frac crews busy just to be on the list when the rush started, and push to complete when the price started up or reached a profitable threshold. That comes from watching companies like Exxon continue to drill during low price periods to have product to take to market when prices go back up. If you don't have production to sell, you can't take advantage of price swings.

Smaller companies might do the same on a smaller scale, depending on financial health.

It sure makes sense as long as, as you say, one can afford it.  Very few companies can, however, as they shrink capital in a bid to preserve dividends and hence stock price during the downturn.  Exxon, one of my past employers, is indeed one of the few that can do this.  Its long term intuitiveness is so solid, it can keep the capital flowing during bad times when costs are cheap, and does not inordinately ramp it up during the good times when services get expensive.

Hope you remain fully employed during all these downturns.

[Smokin Joe]

It sure makes sense as long as, as you say, one can afford it.  Very few companies can, however, as they shrink capital in a bid to preserve dividends and hence stock price during the downturn.  Exxon, one of my past employers, is indeed one of the few that can do this.  Its long term intuitiveness is so solid, it can keep the capital flowing during bad times when costs are cheap, and does not inordinately ramp it up during the good times when services get expensive.

Hope you remain fully employed during all these downturns.

Thanks. I haven't, but I saw the downturn coming from over a year out, stocked the larder, paid everything off, really set back some savings, and lined up things which could be cut from the budget.

I did a lot of work for an EOM subsidiary. Nine years while working for a different firm, then five plus under my own flag, follow the rig. They added rigs, changed out rigs, and most of the folks who worked in the office for the company the subsidiary bought before EOM bought them had retired. When they cut back they used a last in/first out policy. The people doing the counting didn't count the nine years working for them with the other firm, just the five under my own flag.

So it goes.

[IsailedawayfromFR]

Thanks. I haven't, but I saw the downturn coming from over a year out, stocked the larder, paid everything off, really set back some savings, and lined up things which could be cut from the budget.

I did a lot of work for an EOM subsidiary. Nine years while working for a different firm, then five plus under my own flag, follow the rig. They added rigs, changed out rigs, and most of the folks who worked in the office for the company the subsidiary bought before EOM bought them had retired. When they cut back they used a last in/first out policy. The people doing the counting didn't count the nine years working for them with the other firm, just the five under my own flag.

So it goes.

Sorry to hear all that, but hey, it is the oil patch, one of the rockiest and darn funniest places to work.

Am now retired, but my own sob story was 27 years with a major, laid off right before turning 50 and grandfathering healthcare benefits. Floated for two years as consultant before getting on with large independent for next 13 yrs.

Had a good run and am not languishing or regretful at all.

Love the industry, and will consult again in due time when an up cycle occurs and they need old farts.

[Smokin Joe]

Sorry to hear all that, but hey, it is the oil patch, one of the rockiest and darn funniest places to work.

Am now retired, but my own sob story was 27 years with a major, laid off right before turning 50 and grandfathering healthcare benefits. Floated for two years as consultant before getting on with large independent for next 13 yrs.

Had a good run and am not languishing or regretful at all.

Love the industry, and will consult again in due time when an up cycle occurs and they need old farts.

Yeah, the ups and downs are crazy, but it gets in your blood. Where else can you go from making 40K to 240K and back to 30K in six or seven years. You learn to plan for the bust phase, because it is only a question of when, not if, it will come. It was a good run, in at the very start of the Bakken Boom out for the bust. Looking for the 'next big thing', and I have an idea for one out of state...I know it's there, and everyone said "it can't be done", but I think we have the tech now.

[IsailedawayfromFR]

Looking for the 'next big thing', and I have an idea for one out of state...I know it's there, and everyone said "it can't be done", but I think we have the tech now.

That's what I love about you geos - always full of ideas.  Some are fantasy, but some make it happen and us engineers are way too conservative to see out yonder.

[Smokin Joe]

That's what I love about you geos - always full of ideas.  Some are fantasy, but some make it happen and us engineers are way too conservative to see out yonder.

Yeah, I remember when people would tell the bartender to cut us off for thinking wild things like 'if we could just drill sideways in the formation..." or "If we could just run a survey without having to wait on that wireline tool..."
We get through to the occasional engineer with a bit of vision, someone accepts the challenge, and great things come of it.

(I still want my flying car!)