The horizontal rig count in the 4 major US tight oil basins has doubled since August 2020 (from 143 to 281). The share of the Permian basin has increased to 80% (223 rigs).
In this monthly report, we will analyze the latest developments in the 4 major US tight oil basins, which includes the Permian, Williston, Eagle Ford and the DJ-Niobrara.
This report will cover the following topics:
- Drilling activity & tight oil outlook
- Well productivity and completion trends
- The top tight oil producers
- Operator productivity ranking
- Terminal decline rates
1) Drilling activity & tight oil outlook
The horizontal rig count in these 4 basins has almost doubled since August 2020, from 143 to 281 as of last week (early June). The share of horizontal rigs in the Permian basin has increased to 80% (223).
Assuming no changes in well productivity and rig efficiency, this level should be sufficient to maintain tight oil output going forward, as our Supply Projection dashboard shows:
The top chart plots the horizontal rig count, the bottom one shows past and future tight oil production, both colored by basin. With more rigs returning to the fields, as seems likely in the current pricing environment, this projection will obviously further improve.
2) Well productivity and completion trends
Well productivity has radically improved, as you can find in our Productivity over Time dashboard:
We can see in the top-right chart how well performance, as measured by the average cumulative oil recovered in the first 6 months, has changed over time in each of these basins. Only horizontal oil wells that came online since 2013 are included in this analysis. The wells that were completed in the Permian basin during the last 2 years had the best results, with just over 110 thousand barrels of oil recovered, on average. The Bakken was next, at 108 thousand barrels, while productivity actually fell in the Eagle Ford last year (to 80 thousand bbl, down from 88 thousand in 2019).
These results are not normalized for the increase in lateral lengths and proppant loadings, which are both displayed in the 2 charts below. Normalized for lateral length, productivity seems to have fallen last year, although this was at least partially caused by the shut-ins during the WTI collapse and the freezing temperatures in February.
Proppant loadings increased to over 17 million pounds per completion in the Eagle Ford and the Permian in 2020.
3) The top tight oil producers
The following dashboard gives an overview of the top-10 oil producers within these basins, through March 2021:
All these producers saw their output restored after the operational challenges in February. ConocoPhillips took over the lead from EOG in March. It also saw a major boost in output from its acquisition earlier this year of Concho Resources, here shown through January.
4) Operator productivity ranking
In the chart above, from our Productivity Ranking dashboard, you can find a ranking of all major operators (>200 operated wells), based on average well productivity, measured by the average cumulative oil production in the first 12 months. Only horizontal oil wells with a production start after 2015 are included.
Endeavor Energy (one of our customers), scores the best on this metric, with an average recovery of 198 thousand barrels of oil in the first year (440 wells).
Cimarex, which will be acquired by Cabot, is in the 2nd position with 195 thousand bbl (404 wells).
Occidental, which was briefly the largest tight oil producer last year, is shown here in the 24th position, with just 130 thousand barrels, on average (2,281 wells).
5) Terminal decline rates
Decline rates are high in US shale, but how high exactly and how do older wells behave?
To answer this question, we developed the Terminal Decline Rates dashboard, which is visible here:
The performance of all horizontal oil wells is shown in the top right chart; it plots the average oil production rate vs. years on production, by basin.
The chart below it reveals the underlying annual decline rate. Note that the average decline rate is between 55% and 65% in year 2, but that this decline drops over time, to about 10–15% by year 8.
Want to further explore industry data?
You can directly request a free trial via shaleprofile.com/trial to try out ShaleProfile Analytics for 10 days.