Rig Counts? Shale Needs New Metrics -- June 28, 2020

Updates

Later, 8:02 p.m. CDT: a reader sent me this note earlier today -- but I didn't have a chance to post it until now -- sorry for the delay --

About a year or so back, more and more operators were incorporating a 'stages per day' number in their presentations as a way of displaying increased productivity/efficiency in their operations.

Drilling footage per 24 hours is another commonly cited metric.

Seven [frac] stages per day is about the norm, with some touting 12 stages in a day as their record.

It is fairly routine for a frac spread to complete 3 to 5 wells simultaneously on a pad nowadays. At 40 stages per well, for illustration, a 4-well frac will be 160 stages over - maybe - 3 1/2 weeks. While this may be a more relevant criteria as regards near term future production, it is still but one of several factors.

Ultimately, price received (aka revenue) remains the dominant determining component.

Restricted output (choking back), temporary shut ins also figure into these projections.

Overall, it looks to me that this epochal, global Game of Chicken will greatly favor the US independent shale producers. Massive backlog of DUCS can be revenue producers fairly quickly at -relatively - minimal cost. Slashed CAPEX (new drilling) will greatly reduce ongoing expenses. Assets of the inefficient (Chesapeake kinda fits this slot) will be acquired by the better-run outfits, making them even stronger. Precarious times will not last, but the strong will certainly survive.

Comment: I agree completely that revenue is the dominant determining component. What I find  interesting is comparing conventional onshore vertical wells with tight, unconventional, horizontal wells. To the best of my knowledge -- this was going on before I started following the oil industry -- with onshore vertical drilling, once wells reached total depth they were brought on line fairly quickly. The industry really wasn't talking about DUCs. But with tight, unconventional horizontal wells, there were two components -- the vertical and the lateral. It didn't occur to a lot of folks early on that someday, horizontal wells might be drilled but not completed. That was a completely different twist. I find it quite fascinating.

Original Post

I don't want to say "rig counts don't matter" .... but ...

Just released by EIA today on twitter (same graph: one from twitter, one from EIA):

One suggestion I've heard: frack stages/month.

One has to admit, the "production" graphs placed opposite the "drilling/well count" graphs really defy "conventional" explanation.