The total number of DUCs is declining, but remains elevated
Along with its monthly Drilling Productivity Report (DPR), the EIA released a supplement today which estimates the number of drilled uncompleted wells (DUCs) in the seven key oil and natural gas producing regions covered by the agency’s broader drilling report. The number of DUCs has been declining over the past few months, but it remains well above levels seen prior to the late-2014 price crash.
Current EIA estimates show DUC counts as of the end of August totaling 4,117 in the four oil-dominant regions and 914 in the 3 gas-dominant regions that together account for nearly all U.S. tight oil and shale gas production. In the oil regions, the estimated DUC count increased during 2014-15, but declined by about 400 over the last 5 months. The DUC count in the gas regions has generally been in decline since December 2013.
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While both drilling and completion activity have declined since late 2014, completions have experienced a deeper decline than drilling in the four DPR regions (Bakken, Niobrara, Permian, and Eagle Ford) that account for nearly all tight oil production, resulting in a growing inventory of DUCs.
The differential reduction in drilling and completion rates in these regions may be attributed to several factors, including long-term contracts for drilling rigs and lease contracts that mandate drilling and/or production in order to fulfill commitments made to the landowners and mineral-rights owners. Related: Lack Of Pipelines Continues To Dog Canada’s Oil Industry
The situation appears to be somewhat different in the other three DPR regions (Marcellus, Utica, and Haynesville) where the production mix skews heavily towards natural gas, in which significant price declines began as early as 2012.
Near term contracts for West Texas Intermediate crude oil traded above $46/barrel today. Natural gas traded above $2.90 per Mcf.
By Oil & Gas 360
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