Diversified Oil & Gas. Wiki. In case this name comes up again some day. Robert Hutson bought his first natural gas well in 2001. He now has 60,000 wells across the Appalachian Basin. What a great country. I guess he could have bought a corner "7-11" or a Dairy Queen or a Waffle House but instead bought a natural gas well. Headquartered in Birmingham, AL, and listed on the London exchange, had revenues of $400 million in 2020 with a net income of ($24 million) in 2020.
Super-long laterals: US upstream industry relying on longer lateral drilling to boost cash flows. Link here.
The article is all about the Permian. We went through this "debate" in the Bakken some years ago. For a number of reasons, the Bakken is ideally suited for 20,000-foot laterals but interestingly enough, the standard remains 10,000 feet. Maybe we will see the industry move to 20,000-foot wells in the Bakken somewhere down the road but after several years, it certainly seems the 10,000 lateral is the way to go in the Bakken.
On the other hand, the technology might be there, but anyone watching the Permian understands why super-long laterals have not yet become the standard.
By the way: when it comes to cost, the long pole in the teepee is not the drilling -- it's the fracking. From my limited perspective, the focus needs to be on completion strategies, not drilling.
From the linked article:
According to Daryl Koo, head of oil asset intelligence for energy consultancy Enverus, in the core Delaware Basin Wolfcamp-A formation, the breakeven WTI price of a well decreases from $38/b to $34.50/b when going from 5,000 foot to 10,000 foot laterals.
"Though we didn't model a 15,000-foot case given it's still an emerging design, I'd expect the breakeven price to further decrease to around $31-$33/b, assuming no major issues with production or cost performance," Koo said.
Upstream operators during Q1 conference calls viewed the incremental economics favorably – especially at current WTI prices well above $60/b.
Break-even prices: regardless of the length of the lateral, did you see the break-even in the Permian? $40 / bbl and less. And WTI is over $60 right now. Put that in your pipe and smoke it.
Scientific American: I haven't subscribed for decades. This is why.
Only because I like maps of railroads: