Are DUCs A "Big Deal"? The Poll Is Closed -- January 26, 2016

Now that we have an additional month of data from the NDIC, and now that CLR, one of the bigger operators in the Bakken, has provided guidance on its own DUCs, I'm going to close out the poll at the sidebar in which we asked whether DUCs in the Bakken were a "big deal" or not:

• Yes: 63%
• No: 33%
• The four comments did not provide any insight, unfortunately; it does appear that those providing the comments have not been paying attention; were one card short of a full deck; had trouble understanding the poll; and/or have very limited insight into the importance of the Bakken, as defined by the Million Dollar Way. Be that as it may, there was little evidence any of those commenting had ever read the purpose of the blog. It's possible there was some issue with literacy. But I digress. LOL.

I have gone back and forth on this issue -- whether DUCs are a "big deal" for quite some time. When I initially posted the poll, I did not think DUCs were that big a deal. When I posted the poll, operators seemed to be completing these DUCs fairly quickly, not really delaying completion for the full two years as allowed under the new rules.

However, recently it appears that DUCs are not being completed as quickly as possible. Of course, some of this may be due to the weather (winter). The number of DUCs has plateaued over the last couple of months (about 1,000) according to NDIC's monthly report.

The most recent guidance suggested by CLR's press release on the company's plans for 2016 suggest that DUCs are going to be a huge deal going forward. From the press release:

Continental plans to defer completing most Bakken wells in 2016, which will increase the drilled but uncompleted ("DUC") inventory from 135 gross DUCs at year-end 2015 to 195 gross DUCs at year-end 2016. This is a high-graded inventory of DUCs, with an average estimated ultimate recovery (EUR) per well of 850,000 Boe.

The question is whether operators will ask for waivers to extend the two-year window on a case-by-case basis. By 2017 there could certainly be a huge backlog of DUCs. 

Based on that one paragraph taken from the CLR press release, it is my hunch that at worse, Harold Hamm will do "quite well" in 2017, and, in fact, could hit a huge payday by 2018 if things pan out the way the tea leaves suggest they will.

By the way, let's say CLR's DUC guidance is representative across the Williston Basin. There are currently about 1,000 DUCs in the Bakken. CLR currently has about 135 DUCS which will increase to 195 by the end of the year [(195 - 135)/135 = a 45% increase year-over year. That would/could suggest about 1,500 DUCs across the Bakken at the end of 2016.