To many analysts and investors who monitor energy sector, drilled-but-uncompleted well (DUC’s) counts are an important metric along with CAPEX plans, acreage grades, and regional risk factors that might affect the production level in the near-term. [One might note that "rig count" was not in that short list. LOL.]
As E&P’s increasingly focus on optimizing field development through multi-well pad drilling in a factory style, it is important to understand how this phenomenon could impact the DUC’s going forward. Energent’s undertaking begins with a well-by-well assessment of DUC counts in the major unconventional basins.
Energent data suggests that post-downturn (Q4 2017 – now) accumulation of Permian DUC’s were not only entirely generated by multi-well pads which consist of between 2 and 4 wells but there was also a sharp drawdown of DUC’s from single-well pads totaling nearly 200. This could suggest tightening capital market for smaller E&P’s that mostly drill vertical and deviated wells.
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I recommend to think of the DUCs in terms of "months of inventory". Take an average of last few months of completions/month. Then divide DUCs by that number.
ReplyDeleteResults (months of DUC inventory)
Oil plays:
Permian: 7.9
Eagle Ford: 7.1
Anadarko: 6.0
Bakken: 5.4
Niobrara: 2.8
Gas plays:
Haynesville:4.2
App: 3.0
Average of all plays: 5.9
So yeah, the Permian does have a relative lot of DUCs. But so does the Eagle Ford. Conversely inventory seems very light in the gas plays and the Niobrara. Bakken and Anadarko probably about normal.
That's actually a very good way to think about that. Thank you. So, for the Permian right now, about 7.9 months of inventory (7.9 months to bring the existing DUCs on line; 5.4 months for the Bakken.
DeleteI track ND DUCs here: http://themilliondollarway.blogspot.com/2018/07/update-on-ducs-july-14-2018.html.
Around 970 DUCs in the Bakken. 30-second soundbite - about 1,000 DUCs at any given time over the past few years, with a range of 800 - 980.
Wells that are off line for other reasons, about 1,500.