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Friday, August 17, 2018

DUCs In North Dakota Continue To Increase -- August 17, 2018

Before we get to the DUCs, let's look at the "breakeven" cost in the Bakken because that's probably of more interest to readers.

This is from yesterday's Director's Cut, June, 2018, data. Years and years ago, Whiting said they were profitable with  the price of oil below $25.
A few months ago a reader raised a question regarding my thoughts on DUCs.

I suggested that operators in North Dakota were "managing their assets," suggesting that it is not due to shortage of frack crews. Obviously it's a combination of both, but I think "managing their assets" is the bigger reason why DUCs are increasing. About two months ago, John Kemp said we were entering a period of "severe backwardation." For newbies, North Dakota doubled the number of months operators were required to complete their wells once spud. Up until the Saudi Surge of 2014 - 2016, North Dakota required operators to complete their wells within one year of spud; operators now have two years, and can go longer with a waiver.

Most sources with which I am familiar don't think DUCs are all that significant a metric to follow.

By the way, there should be an inverse relationship between DUCs and inactive wells, all things being equal, as we see an increase of pad drilling and infill drilling.

Except for a decrease back in January, 2018, the number of DUCs has been steadily increasing. The data is updated here; this page won't be updated.

These are the recent stats for DUCs:

June, 2018: 993, up 38 from previous report
inactive: 1,458, down 111

May, 2018: 955, up 13 from previous report
inactive: 1,569, down 48

April, 2018: 942, up 26 from previous report
inactive: 1,521, down 132

March, 2018: 916, up 15
inactive: 1,653, down 1

February, 2018: 901, up 48
inactive: 1,654, down 100

January, 2018: 853, down 24
inactive: 1,554, up 85

December, 2017: 877, down 6
inactive: 1,469, down 23

And the number month-over-month has also been increasing.
  • June: up 38
  • May: up 13
  • April: up 26
  • March: up 15
  • February: up 48 (North Dakota winters are at their worse in February -- an outlier)
  • January: down 24

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