Article: Canada Shale - Explaining the challenges in the low commodity environment
Sona Mlada, Senior Analyst
Article: The prize of drilling: Greatest shale wells of the year 2015
Per Magnus Nysveen, Senior Partner & Head of Analysis
RYSTAD ENERGY PRODUCT HIGHLIGHTS
Rystad Energy offers a wide product range of North American shale products (NASAnalysis).
NASWellCube:Collection of official US & CA well data, covering over 220,000+ horizontal and fracked vertical wells, with complete US shale coverage, and including well attributes, monthly production rates at well level, reported and calculated initial production rates, well configuration parameters and industry trends such as pad drilling and refractured wells.
In January 2016, Rystad Energy released the NASWellCube Premium module. The premium version in addition includes short-term activity and production forecasts, well cost and breakeven price analysis, estimated 3-stream production series and estimated drilling days for each well.
NASReport:Consists of a monthly insight, short term and medium term forecasts for both production and spending for key North American Shale plays and operators, a deep-dive into well data and completion trends. The NASReport is now electronically delivered on a monthly basis. In May 2016, Rystad Energy released the NASReport 2016 yearly handbook, including a comprehensive description of all relevant shale plays and companies, covering long term production and spending forecasts and valuation.
NASCube:Database that provides US and Canada shale gas and tight oil plays data for 400+ companies and 90+ shale plays and sub-plays. Data derives from Rystad Energy’s global and complete upstream database UCube, with additional information regarding acreage and well data.
NASMaps: Geological, company acreage and well location maps. Maps are available as pdf-layers and GIS files with embedded information for import to GIS software.
Newsletter Subscription:If you are not yet a subscriber to this email or you would like to receive one of our other industry newsletters, please fill out the Newsletter Subscription Form
Permian is dominating the US rig counts, with more active rigs than in other major shale oil plays combined. The resilience of Permian is due to the competitive economic metrics of the wells drilled in the sweet spots. Latest well results indicate that the most lucrative areas in Permian are in the Northern Midland Basin, mostly on the border between Midland and Martin counties, and the area on the borders of New Mexico and Texas in the Delaware Basin. Moreover, Bone Spring wells appear to be the most economic, while Spraberry horizontal and Wolfcamp wells are equally competitive, in terms of well performance.
Figure 1 shows the evolution of the average well cost per boe for selected counties in Permian Midland and Permian Delaware. The decreasing well cost per boe during 2014-2016 reflects lower unit wells costs and higher EUR per well. Significant service cost reductions and efficiencies have been achieved particularly over the last year. In addition, optimization of completion techniques (reduced cluster spacing, increased proppant and fracking fluid, longer laterals) and a shift of focus to the best parts of Permian results on improved well performance. In 2015, the lowest average well cost per boe in Permian was achieved in Culberson County, mainly due to wells with high 30-day initial production rates* and EUR. Permian Delaware has on average lower well cost per boe than Permian Midland. To a large extent, this is explained by higher well costs in the latter, driven by longer laterals and more frac stages. In Permian Midland, Pioneer’s cost savings from unit cost reductions are partially offset by an increase on lateral length (in 2015 it increased the laterals to 9,000 ft on average for Northern Midland and it is planning to test wells with over 10,000 ft in 2016) and frac stages (from 30 in 2014 to 60 in 2015 and about 90 in 2016).
Figure 2 depicts wellhead breakeven prices for horizontal shale wells spudded in 2015 across the Permian Basin. The core areas, with wellhead breakeven prices below 40 USD/bbl, are located in Martin, Midland and Upton counties in Permian Midland and the land close to the Texas-New Mexico border in Permian Delaware. With a Brent oil price around 48 USD/bbl, these areas are very attractive. Indeed, Pioneer Natural Resources, with acreage located in Martin and Midland counties (Northern Midland), is the operator with the highest activity in Permian Midland. The company is planning to operate 12 horizontal rigs in Northern Midland for the remainder of 2016.Concho, the operator with the highest activity in Permian Delaware, focused on the core counties, Reeves, Culberson, Eddy and Lea in 2015. The company is planning to operate an average of 14 horizontal rigs in Permian (75% in Delaware and 25% in Midland) in 2016.
Figure 3 shows breakeven prices by formation for horizontal wells in Permian spudded in 2015-2016 (YTD). The chart includes only key formations such as Bone Spring, Wolfcamp and Spraberry in the core counties in Permian. The formation with the most attractive economics in Permian is Bone Spring with an average wellhead breakeven oil price of about 40 USD/bbl.Bone Spring wells in New Mexico, especially wells targeting the 3rd Bone Spring, appear to be the most economic. Indeed, most operators focused their activity in New Mexico, in Eddy and Lea counties in 2015-2016. The most active operators targeting Bone Springs are Concho, Devon and EOG. In Permian Midland, the best wells are targeting the Spraberry formation in Martin and Midland counties, which has an average wellhead breakeven price of 47 USD/bbl. Pioneer and Diamondback are the operators with highest activity in Martin County, drilling Spraberry horizontal wells with an average breakeven price of 37 USD/bbl. Even though Wolfcamp in Permian Midland is not as attractive as other formations, there is a high variation depending on counties and operators. Wolfcamp wells in Martin, Midland and Upton counties have an average wellhead breakeven price of 55 USD/bbl. Pioneer, the company with the most Wolfcamp wells spudded in 2015-2016, has an average wellhead breakeven price of 46 USD/bbl.
*In 2015, Culberson County had an average 30-day initital production rate of about 1,200 boe/d, while the other Permian Delaware counties shown in the chart averaged 750 boe/d.