Effective Rig Count up on reported rig counts

EnerCom has released its latest Effective Rig Count, examining the state of drilling activity and the reported production from the major shale basins.

The Effective Rig Count rose in October, reversing the past month’s decline. The Effective Rig Count is currently 2,780, up 14 from last month. This increase was entirely due to increased drilling activity, with eight rigs coming online in the major basins. Efficiencies, on the other hand, are in decline.

While the Midland differential has fallen since peaking at over $17/bbl, Permian operators are still being impacted by the takeaway constraints the basin is experiencing. The basin’s efficiency multiple, which expresses current per-rig production growth compared to the per-rig production growth seen in January 2014, has been in decline for much of the year. Companies are choosing to defer completions until takeaway improves, meaning rig activities are not translating into production. The Permian is so influential that the declining efficiencies in the basin outweigh the increased efficiencies in other plays. The overall U.S. productivity multiple is currently dropping.

Appalachia dominates gas growth at a frantic pace

The decline in Permian productivity has not impeded production in the basin, as the Permian is predicted to add 63 MBOPD in the coming month, more than half the total oil growth among the major shale basins. The Bakken and Eagle Ford are also adding oil output rapidly, with production growing by over 15 MBOPD in each basin. In total, the major shale basins are expected to increase oil production by 113 MBOPD from November to December.

Appalachian Monthly Gas Growth Exceeds 400 MMcf/d

Source: EnerCom Analytics

The Appalachian continues to grow at a frantic pace, as the basin is projected to add 403 MMcf/d of gas production from November to December. In terms of gas production growth, no other basin even comes close to Appalachia, as the Permian is expected to add 251 MMcf/d in the month and the Eagle Ford and Haynesville are growing at half the rate of the Permian.

Delayed completions cause rising DUC count

The balance of drilling and completions continues to be vary widely between basins. DUC counts are falling in the Bakken, Niobrara and Appalachia, where completions outpaced drilling by a combined 53 wells. In the Permian, however, DUC counts rose by 249 in the month.

This situation is not likely to change this year, as many companies have announced they are paring back completions activities to stay in budget. Carrizo, for example, is planning a frac holiday in November and December, delaying all completions for the last weeks of the quarter. DUC counts also rose in the Anadarko, Eagle Ford and Haynesville, meaning overall DUC count in the major shale basins increased by 269 to 8,545.

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