Permian Part 1 of 2: Even $30 Oil Can’t Hold Back Delaware Basin Activity
Many operators turn their focus to the Permian as their “core” basin in 2015. The operators rely on the play to have the best economics to produce in this low priced environment, so we took a deeper dive into specific areas to show a more detailed view of activity. Part one of this article will go into the Delaware Basin and will be followed up with part 2 in the Midland basin next week.
Not surprising, the number of frac jobs in the Delaware Basin decreased by -50% in the fourth quarter of 2015 compared to the fourth quarter of 2014 when prices started their downward trend.
Ward County Sees -78% Decrease in the Number of Frac Jobs
Reeves is still the most active county, but Loving county has become the third most active county taking over Ward county. Ward county has seen a decrease of -78% y-o-y in the number of frac jobs were in the fourth quarter of 2015 there were only 16 jobs*.
Operators Continuing to Rely on the Delaware
Operators like Occidental, Apache and Cimarex have been leading the way with the most frac jobs since the start of 2014 but have notably decreased activity from around 30 jobs per quarter to most recently just over 10 per quarter*. Cimarex is allocating 65% of their ~$625 million budget for 2016 to the Permian focusing in on the upper and lower Wolfcamp formations in Culberson county. Apache is prioritizing the Delaware basin as one of the most impactful and highest ROR and NPV in the company’s portfolio.
Operators continue to “optimize” completion designs with longer laterals and higher proppant amounts per lateral foot. In the Permian, lateral lengths have been growing, recently averaging over 3,000 feet after starting 2015 at an average of 2,423 feet. With higher density completions and longer laterals, operators are still pushing total well costs down further by taking advantage pad-capable drilling rigs and lower costs for sand. Energent Group’s Pad research shows pad trends by operator and basin.
Halliburton Maintains Market Share in Delaware
Below is a comparison of the top OFS companies by market share in the Delaware basin as of years-end 2015 compared to the year prior:
- Halliburton 2014 – 29% vs 2015 – 20%
- Superior Well Services 2014- 6% vs. 2015 – 13%
- Schlumberger 2014 – 31% vs. 2015- 11%
- FTSI 2014 – 1% vs. 2015 – 9%
- Cudd 2014 – 0% vs. 2015 – 8%
- Other 2014- 32% vs 2015 – 40%
Reeves County Leads Drilling Activity with 20 Active Rigs
Rig activity in the Permian has declined -54% since this time last year with the current count being 165 rigs. Of those rigs running 86.7% are horizontal and 98.8% are oil rigs. See more details at Energent Groups interactive BHI U.S. Land Rig Count report.
In the Delaware Basin the rig count dropped to 45 rigs with Precision and H&P each running 10 rigs. Other active drillers include Latshaw, Pioneer, Nabors and Scandrill. Currently, the most active operator is Anadarko who is running 7 rigs with Cimarex, Apache, and Shell who account for 10 rigs in the basin. For more permit, rig, and completion activity visit Energent Group.
*Due to a delay in reporting numbers may increase in the future
Find out how Energent Group’s Operator Briefings can help you target strategic accounts to stay ahead of your competition. Contact us to get more information and samples.