A reader pointed out that Rystad's update in "remaining years of drilling in Tier 1 at 2019 and 2020 pace," emphasizing "pace" of drilling in those years.
In general, drilling is directly correlated with number of new permits.
I forget what year it occurred, but somewhere between 2014 and 2016, NDIC doubled the length of time a spudded well needed to be completed, from one year to two years.
Permits are good for one year, but easily renewed.
Anecdotally, it appears that operators are renewing expired and expiring permits.
One of the most important concepts I've learned about the oil and gas business:
- the importance of E&P companies to manage their assets
- a key component of managing assets is not drilling out your entire inventory as quickly as possible regardless of value of one's assets -- unless one plans to liquidate the business
It's also important for other reasons to extend the number of years of drilling activity, regardless of the reason.
Permitting
2021:
- as of March 11, 2021: 70 calendar days
- 149 permits to date, CY 2021
- projection: 777 new permits this calendar year
Past years, total number of oil and gas permits, followed by annual crude oil production -- and then production that year / permits that year:
- 2021: projected -- 777 permits
- 2020: 763 -- NDIC pending -- per EIA: 431,720,000 -- 565,819 bbls / new permit
- 2019, 1,397 -- 524,421,345 bbls -- 375,391 bbls / new permit;
- 2018: 1,466 -- 466,419,743 bbls -- 318,158 bbls / new permit;
- 2017: 1,189 -- 394,759,760 bbls -- 332,010 bbls / new permit;
- 2016: 818 -- 380,372,587 bbls -- 465,003 bbls / new permit;
- 2015: 2,055 -- 432,526,847 bbls -- 210,475 bbls / new permit;
- 2014: 3,012 -- 397,209,473 bbls -- 131,875 bbls / new permit;
- 2013: 2,671 -- 314,043,664 bbls -- 117,575 bbls / new permit;
- 2012: 2,522 -- 243,363,503 bbls -- 96,496 bbls / new permit;
- 2011:1,916 -- 153,075,204 bbls -- 79,893 bbls / new permit;
Comments:
- NDIC is yet to post 2020 production; the data posted for 2020 comes from the EIA;
- 2016 is a particularly interesting year; at a time of very low prices, E&P companies circled their wagons and drilled only their best prospects; that looks like that's going to be true for 2020, also;
- throw out 2016 (and 2020), and the trend is very interesting
- based on 2016 data, I would suspect two things for 2021 (note: 2021, not 2020)
- bbls / permit could exceed 400,000 bbl
- publicly traded companies are going to show impressive FCF numbers
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Annual Production -- NDIC
The most interesting column in the spreadsheet below: column #5, daily oil per well.
