Vertical Wells -- July 11, 2020

A reader writes, wondering if five weeks is long enough to establish a trend:

With low prices for oil & natural gas, it appears there has been an ongoing shift from expensive horizontal drilling to the less sophisticated conventional vertical drilling.

Recall that in the Dallas Fed energy survey of a couple months ago, of the 157 oil executives responding, none could profitably drill a new well in any US shale basin at an oil price below $30 a barrel, but at least one company thought they could profit with oil at $15 a barrel by drilling a vertical well.

On June 5th, there were 253 horizontal rigs, 24 directional rigs, and 7 vertical rigs deployed; but as we have just reported, by July 10th horizontal rigs had fallen by 33 to 220 rigs, directional rigs had fallen by 5 to 19 rigs, but vertical rig activity had increased by 12 rigs to 19 vertical rigs.

My sense is that some of this is taking place in the Permian basin, as horizontal rigs are being shut down in Permian Delaware, while vertical rigs are starting up in the Permian Midland, but to establish that, one would have to locate the individual well records on the North America Rotary Rig Count Pivot Table, and I don't have the patience for that tedious endeavor.

Nor do I.

From Xinhuanet:

The number of active drilling rigs in the United States decreased by 5 to 258 this week, down by 700 year on year, according to .... Baker Hughes.

These active drilling rigs included 181 oil rigs operating in the U.S. oil fields, down by four from the previous week; 75 gas drilling rigs, down by one from the previous week, and two miscellaneous rigs, unchanged from last week.

The 258 rigs included 246 land drilling rigs, down by five from the previous week, and 12 offshore drilling rigs, unchanged from the previous week. There was no inland waters drilling rig this week, same as last week.

Of the 258 land rigs, 19 were directional drilling rigs, 220 were horizontal drilling rigs and 19 were vertical drilling rigs.

I have not seen any new vertical well activity in the Bakken, so I tend to agree that it's most likely in the Permian where there might be new vertical drilling.