The time it takes for an oil and gas company to drill, complete and put a well on production is not a metric the industry or investors have traditionally focused on. However, cycle time, meaning “time to market”, has a major impact on operator cash flow and overall profitability.
A critical component of cycle time is work-in-process (WIP).
WIP is the set of wells that have been spud but have not been put on production including all wells being worked on or waiting for next operation. Almost all operators track WIP, but few know how much WIP there should be and even fewer operators are actively controlling WIP.Another metric not well tracked by the industry: DUCs. DUCs are tracked by some but no has really figured out how to "quantify" them.
And finally, a third metric, the number of wells "off line" or "inactive" for operational reasons, generally while neighboring wells are being fracked. In the "old days" a neighboring frack might affect one older producing well. These days, a neighboring frack will easily take six neighboring wells off line for one to three months. On top of that, we are seeing fewer and fewer "single" wells being fracked. Now, due to pad drilling, we see six wells being fracked in rapid succession.
The newly fracked wells are producing upward was six times or more what we used to see with the Bakken wells drilled ten years ago.
And, finally if that's not enough, the older, neighboring wells are positively affected by new neighboring fracking (advantaged oil) and even if not significantly affected positively, they are "never" affected negatively in the Bakken.
