US unconventional drilling stalls in 2019 while completion is expected to increase 4% in 2019
With E&P’s showing an increased level of commitment to generate higher returns for their investors through capital disciplines, onshore US drilling and completion activity will likely remain stagnant in 2H 2019 in a $60/WTI base case oil price scenario – based on a consensus among 25 investment and financial institutions.
US L48 D&C Outlook 2014-2023 Summary. Westwood expects the DUC inventory to decrease, especially once Permian price differentials subside with the commissioning of new pipelines. The Permian basin currently has the most DUC’s at 2,600.
Source: Westwood data and analysis
Key Findings:
- (Multi-Well Pad Drilling Trend) Multi-well pad drilling is continuing to rise in the US unconventional basins. The DJ-Niobrara, Williston and Eagle Ford are currently at above 90% adoption rate. The 50% adoption line was reached in Q4 2017 by all basins.
- (Total Footage Drilled) While total number of horizontal wells drilled in 2018 is almost 25% lower than 2014, the total footage drilled is nearly the same, indicating the magnitude of growth of lateral length in recent years. Vertical and deviated wells have dropped sharply since the 2014 oil price downturn, currently at 10 million feet across the eight basins.
- (SatScout Analysis) Satellite-driven analytic service by Westwood reveals that oil majors took longer to frac their wells from the point of pad constructions. The median pad-to-frac cycle time for majors was 264 days for wells frac’ed during Q1 2019.
