EERC drops by 13

EnerCom released its monthly EnerCom Effective Rig Count today, for August, reporting an equivalent 2,353 rigs active in the U.S., down from 2,366 last month. The Effective Rig Count adjusts reported rig counts for increasing efficiency in drilling and completions.

Stubborn sub-$50 oil prices have caused drilling activity to decline slightly, meaning the effective rig count has also dropped by 13. Overall productivity also decreased slightly, as completions activity lags drilling. This is the first decrease in the Effective Rig Count since May 2016, near the bottom of the commodity price downturn.

The average modern rig is now yielding just under 2.9 times more production than the average rig did in January 2014, reflecting improvements from new technologies and techniques.

When compared to early 2014 productivity rigs in the Utica basin are the most improved, yielding nearly 5.1 times as much production as old rigs did. The Niobrara and Bakken have also seen significant improvement, with modern operations each producing more than three times as much production.

Effective Rig Count Ticks Down, Records First Decrease since Bottom of Downturn in 2016

Source: EnerCom Analytics

Basin-specific effective rig counts showed decreases in several different basins. The Eagle Ford saw its EERC drop by 13, as Hurricane Harvey forced companies to shut in production. Decreases were also seen in the Anadarko and Marcellus, where drilling outpaced completions work.

Effective Rig Count Ticks Down, First Decrease since Bottom of Downturn in 2016

Source: EnerCom Analytics


Production up, but growth smaller than in previous months

The EIA predicts that overall production among the major basins in the U.S. will continue to rise in September, though not at the rate seen in previous months. Current estimates predict that production will rise by 79 MBOPD and 788 MMcf/d in September, compared to 117 MBOPD and 929 MMcf/d in August. The slowing growth is mostly due to hurricane Harvey’s effects in causing companies to shut in production in the Eagle Ford, where production is expected to decrease by 9 MBOPD and 11 MMcf/d.

Growth is expected in each of the other major basins, with the Permian leading the pack in oil production growth and Appalachia dominating in gas production growth.

DUCS on the rise

Drilled uncompleted wells continue to increase, with companies continuing to struggle to keep up with the current activity resurgence. The EIA estimates that there are now 7,048 DUC wells in the major basins in the U.S. This represents an increase of 231 in August, primarily driven by activity in the Permian. The most popular basin in the U.S. is also the home of the most DUCs, as 2,297 drilled uncompleted wells are in the Permian. Unlike many previous months in 2017, no region saw DUC count decrease in August.

Effective Rig Count Ticks Down, Records First Decrease since Bottom of Downturn in 2016

Source: EIA

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