The US drilling rig count increased a mere 3 units during the week ended Feb. 24 following 5 straight weeks of double digit gains, according to Baker Hughes Inc. data. A light week of activity was headlined by 3-unit rises in each of the Permian and Eagle Ford, where US exploration and production firms are seizing new opportunities created by steadier crude oil prices, newly acquired acreage near existing operations, advanced drilling and completion technology, and more productive wells
The overall US count now totals 754, up 350 units since a modern era nadir of 404 touched last May 27 (OGJ Online, Feb. 17, 2017). Operators this week continued to sharpen their focus on oil and onshore horizontal drilling.
US oil-directed rigs gained 5 units to 602, up 286 units since their modern era bottom on May 27. Rigs targeting natural gas dropped 2 units to 151, up 70 since Aug. 26. One rig considered unclassified is actively drilling.
The US Energy Information Administration said this week that US crude oil production climbed back above 9 million b/d during the week ended Feb. 17 for the first time in 10 months. The 24,000-b/d week-over-week gain comprised 17,000 b/d from the Lower 48 and 7,000 b/d from Alaska.
The onshore tally rose 3 units to 733, with horizontal rigs jumping 10 units to 624, up 310 since May 27. Directional drilling rigs decreased 3 units to 69.
Excluding rig evacuations necessitated by the threat of Tropical Storm and then Hurricane Hermine last fall, the US offshore count matched its lowest level since the post-Macondo fallout in 2010, with Alaska losing its only offshore unit to bring the US count to 17. The US tally of rigs drilling in inland waters, meanwhile, rose a unit to 4.
Primarily lifted by the Permian and Eagle Ford, Texas increase 8 units this week to 386, up 213 since May 27. Up 3 units each, the Permian and Eagle Ford total 306 and 64, respectively.
The Permian is now up 172 units since May 13. The Eagle Ford’s resurgence has been more of a recent development, with the South Texas shale region gaining 33 units since Oct. 14.
Elsewhere this week, the Haynesville edged up a unit to 35, up 22 since Sept. 30. The Granite Wash dropped a unit to 12.
Wyoming was the only other state to record an increase, tallying 1 unit to 19. Oklahoma’s Cana Woodford rose 2 units to 51, up 27 since June 24.
North Dakota and its Williston each declined a unit to 34 and 35, respectively. Including its offshore loss, Alaska dropped 2 units to 7. Louisiana also fell 2 units, bringing its count to 49.
In Canada, meanwhile, the count gained 10 units to 341, up 305 since May 6. Oil-directed rigs jumped by 12 to 206 while gas-directed dropped by 2 to 135.
Permian programs to advance
For operators that have expanded their positions in the Permian in recent months, this year signifies an opportunity to advance development and move closer to the gaudy production numbers their management envisioned upon commencing those deals. Firms such as Noble Energy Inc., Parsley Energy Inc., and Diamondback Energy Inc. in recent weeks have reported increased near-term drilling plans that include their newly purchased acreage.
Another active Permian dealmaker over the past year, Concho Resources Inc. this week said it intends to operate in 2017 an average of 19 rigs, up 1 from its fourth-quarter 2016 average. The firm will average 8 rigs in the northern Delaware basin and 4 rigs in the southern Delaware. In the Midland, basin the firm will average 5 units, and the remaining 2 units will drill on the New Mexico Shelf.
WPX Energy Inc. plans a 10-rig program companywide for 2017. The firm expects to complete 85-100 wells in the Delaware basin assuming the completion of its pending acreage acquisition from Panther Energy Co. II LLC and Carrier Energy Partners LLC (OGJ Online, Jan. 13, 2017).
The firm will continue running 5 units in the basin, including the existing 2-rig program absorbed by the purchase. The 3 units on Delaware acreage already held by WPX are drilling extended-length, 1.5-2 mile laterals. Roughly 40% of the company’s Delaware wells in its 2017 drilling plan are extended-length laterals.
In the Williston, WPX has 2 rigs working to complete 38-42 wells. In the San Juan basin, the firm has 1 rig working to complete 40-46 wells.
QEP Resources Inc. plans to operate an average of 7 rigs companywide in 2017, with 5 in the Permian, 1 in the Williston, and 1 in Pinedale. At the end of fourth-quarter, the firm had 3 operated rigs in the Permian, with 1 on its County Line acreage and 2 at Mustang Springs, all drilling horizontal wells. The firm expects to add 2 more operated rigs in the first quarter.
With the exception of Pinedale, all rigs will be drilling horizontal wells. QEP expects to complete 98-110 net wells during the year, with 75-80 net in the Permian, 15-20 net in the Williston, and 8-10 net in Pinedale.
Eagle Ford, Williston plans
Increases in rig deployments in the Eagle Ford and, to a lesser extent, the Williston during recent months serve as a reminder that not every US onshore operator is banking entirely on the Permian for future drilling and production success.
Sanchez Energy Corp., which has grown its presence in the Eagle Ford in recent years, is running 2 rigs each on its Catarina and Maverick positions. As of Dec. 31, 2016, the firm had completed its 50-well annual drilling commitment at Catarina for the period from July 2016 through June 2017.
Upon completion of its $2.3-billion deal alongside Blackstone Energy Partners LP to buy Comanche acreage from Anadarko Petroleum Corp., Sanchez Energy expects to exit the year running 5 rigs (OGJ Online, Jan. 17, 2017).
Fellow Eagle Ford operator Carrizo Oil & Gas Inc. is running 3 rigs in region and expects to drill 92 net operated wells and complete 87 net operated wells there during 2017.
North of Texas, Whiting Petroleum Corp. plans to run 5 rigs in the Williston where it targets the Bakken-Three Forks formations, and run 1 rig in the DJ Basin where it targets the Niobrara A, B, and C zones and the Codell-Fort Hays formations. The firm’s DJ basin activities include the planned completion of 105 drilled but uncompleted (DUC) wells
Ultra Petroleum Corp., restructuring after filing for bankruptcy last year, has added a third and fourth rig, including a high-spec AC rig, to its Pinedale acreage in Wyoming since the end of third-quarter 2016. “By returning rigs to our fleet which have worked for us in the past, we obtain equipment that is fit-for-purpose to our specifications without any of the cost for new build or refurbishment,” the firm said.
Oasis Petroleum Inc. is increasing rig count to 4 from 2 this year in the Wild basin of North Dakota.
US gas regions to hold steady
Operators primarily targeting shale gas have also drilled with more stability as gas prices are up modestly from late-2015, early-2016 lows.
In the Utica, Gulfport Energy Corp. has 6 operated horizontal rigs drilling and plans to continue running that total throughout 2017. The firm has budgeted to drill 67-74 net horizontal wells and turn-to-sales 61-67 net horizontal wells in the region.
Following the expected February completion of its $1.85-billion purchase of 46,400 net surface acres in the SCOOP from Vitruvian II Woodford LLC, Gulfport plans to run 4 operated horizontal rigs on its new position, and has budgeted to drill 16-18 net horizontal wells and turn-to-sales 14-16 net horizontal wells (OGJ Online, Dec. 14, 2016).
Gulfport also plans to run one drilling rig and one recompletion rig at its West Cote Blanche Bay and Hackberry fields in South Louisiana.
Rice Energy Inc. intends to operate an average of 4 horizontal rigs between the Marcellus and Utica. In the Marcellus, the firm plans to spud 75 net wells with an average lateral length of 8,500 ft and turn to sales 55 net wells with an average lateral length of 8,000 ft. In the Utica, Rice plans to spud 20 net wells with an average lateral length of 10,500 ft and place online 20 net wells with an average lateral length of 9,000 ft.