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RYSTAD ENERGY PRODUCT HIGHLIGHTS
NASWellCube: Database with daily updates of official US & CA well data, covering over 600,000 wells and permits. It contains a detailed analysis of well curves, pad drilling, re-frack trends and well economics to provide a complete well by well overview of the North American shale industry.
NASReport:Consists of monthly insights on industry trends, forecasts (short and medium term) for both production and spending. Detailed analysis of key North American shale plays and operators and a deep-dive into well data for drilling, completion and productivity trends. Delivered electronically on a monthly basis.
NASCube: A subset of UCube. Database with monthly updates of the US and Canada shale gas and tight oil data for 2000+ acreage positions and 90+ shale plays and sub-plays with NPV estimations and long-term forecasts at the asset level. Data derives from Rystad Energy’s global upstream database UCube, with additional information regarding acreage and well data.
NASMaps: Geological data, company acreage and well location maps for the main North American shale plays. Maps are available as pdf-layers and GIS files with embedded information for import to GIS software. Maps are also integrated into the NAS databases.
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Despite the prevailing low oil price environment, the Permian plays are expected to increase production by more than ~800 thousand boe/d in 2017 and lead the shale supply growth in the future. Although a lot of attention has recently been drawn to the activity in the Permian Midland Basin, comparatively little analysis has been dedicated to evaluating trends in the Delaware Basin. At the same time, the number of active horizontal rigs in Permian Delaware has more than doubled since 3Q 2016, surpassing activity in Permian Midland in October 2016.
Furthermore, we have seen a notable improvement in well performance over the last years across all shale plays, with Permian Delaware exhibiting by far the largest growth in IP rates. Figure 1 depicts the average 30-day production rate for horizontal wells across the top US shale plays. While historically Eagle Ford showed the best performance in the industry, the 30-day production rate in Permian Delaware has increased by 60% since 2014, reaching the rate of 1220 boe/d so far in 2017.
A number of key drivers explain the top performance of the Permian Delaware operators, and high-grading of acreage is one of them. Figure 2 shows that in the last years drilling activity has largely been concentrated in the core acreage of the play, with the share of wells drilled in Tier 1 and Tier 2 parts of acreage having increased from 46% in 2013 to nearly 80% so far in 2016. These wells realize the lowest average breakeven prices (25th percentile and 25th to 50th percentile, respectively) and, thus, constitute the core part of the acreage. In contrast, wells in Tier 3 and Tier 4 exhibit higher breakeven prices and represent non-core activity.
A growing share of completions in the deeper Wolfcamp formation is another trend we observe in the Delaware Basin. Figure 3 demonstrates that the share of Wolfcamp wells has increased from 27% in 2013 to 63% in 2017. Bone Spring completions, on the other hand, constitute less than 30% since 2016.
Figure 4 presents average cumulative light oil production curves for the wells put on production during 2015-2017 by target formation. We observe that the Wolfcamp wells outperform the wells in the Bone Spring and other target formations, which justifies the increased focus of operators.
Optimizations in completion techniques have played a key role in realizing well performance improvements achieved over the last years. Producers in Permian Delaware have boosted well configuration through drilling longer laterals and increasing proppant and fluid loading. As depicted in Figure 5, from the end of 2014 to 2Q 2017, both proppant and fluid intensities have increased by 57% and 60%, respectively. At the same time, the average lateral length has gone up by 30%.
The above trends accompanied by lower well costs have led to the increases in well performance and, consequently, to falling breakeven prices. Breakeven prices in Permian Delaware have decreased by 50% since 2013, and the wells completed in 2017 exhibit average wellhead oil breakeven prices of around 40 USD/bbl. At the same time, a number of dedicated producers realize breakevens of below 30 USD/bbl. Cimarex Energy and EOG Resources have one of the lowest wellhead breakevens in the play, standing at 17 USD/bbl and 26 USD/bbl, respectively. Figure 6 compares average wellhead oil breakevens for the top US shale plays. Being among the most expensive plays in 2013, Permian Delaware has transformed into one of the most commercially viable plays by 2017.
Since 2013, operators in Permian Delaware have managed to achieve impressive well results outperforming other top US shale plays. Concentrating activity in the core areas of the acreage, targeting more productive benches, and optimizing completion techniques has contributed to the improved well performance and a significant reduction in breakeven prices. Given top performance and commerciality of the play, activity and production in Permian Delaware are set to continue expansion in the future.
RYSTAD ENERGY ANNUAL OIL & GAS SUMMITS 2017
Rystad Energy has the great pleasure of inviting you to our Annual Oil & Gas Summits 2017. This year our key events will take place in Houston and London. Join us to hear about our up-to-date market analyses and overview, industry perspectives and data analysis discussions.
September 19-20, 2017 Houston, United States
October 4-5, 2017 London, United Kingdom
The Annual Oil & Gas Summit is free to attend for client companies. To request more information, please visit our dedicated website here. For queries about non-client pricing, please contact Rystad Energy.