Enno Peters
This is an older blog post, you will find one on more recent data here
These interactive presentations contain the latest oil & gas production data from all 21,872 horizontal wells in the Permian (Texas & New Mexico) that started producing from 2008/2009 onward, through April 2019.
With more revision data in, it is clear that a new record was set in March, at about 3.4 million bo/d. I expect that April production will eventually come in close to this level as well. Gas production is rising even more steeply, with over 11 Bcf/d produced in March (switch ‘product’ to gas to see this). Given that the gas/oil ratio rises over time for most of these wells, we expect that this trend will continue.
In the ‘Well quality’ tab you can find the historical production data for all these wells. The bottom chart reveals that initial well performance has kept increasing over the past 8 years. But the rate of improvement has slowed down, and once you correct for the fact that since 2016 laterals have increased by 18% (and proppant loadings by 50%!), this looks even less impressive. In our analytics service you can easily normalize production data for these factors, and these trends can be analyzed by operator and area.
The final dashboard, “Top operators”, displays the production history of the 5 largest producers, with Concho and Pioneer Resources in the lead. Once the acquisition of Anadarko by Occidental is completed, Occidental is likely to overtake Concho as the top operator in this basin.
The ‘Advanced Insights’ presentation is displayed below:
This “Ultimate recovery” overview shows the average production rate for these wells, plotted against their cumulative recovery. Wells are grouped by the year in which production started.
The steady increase in initial production rates, and higher EUR trajectories, is also visible here (not taking into account the forementioned changes in completion parameters). The increase in gas output shows a similar rise; recent wells are on track to recover about 2 Bcf of natural gas, which unfortunately for the operators is not earning good money at the moment.
If you scroll to the right, you will find the 9th tab (‘Gas oil ratio’). The top chart in this dashboard displays how the gas/oil ratio changes over time, by vintage. Recently completed wells start with an average gas/oil ratio (GOR) of about 2 Mcf/bbl, which then appears to increase to about 4 Mcf/bbl by 2 years on production. The 2012 and 2013 vintages are already well over 6 Mcf/bbl, and still rising.
In our advanced analytics service we show the latest GOR for each well on a map, and you can compare these GOR profiles with the related production profiles:
Click on the image to see a high-res version of it.
This week, we were asked several times what we thought about the recent report by Kayrros. We don’t support several claims that they make, such as that well productivity in the Permian is substantially overestimated. It is common knowledge that there are lag times involved with the state agencies and FracFocus. However, production in Texas can only be reported once a well has been assigned to a lease, otherwise it will be reported separately, using the well permit ID.
Early next week we will have a post on the Eagle Ford, followed by an update on the Niobrara.
Production data is subject to revisions.
Note that a significant portion of production in the Permian comes from vertical wells and/or wells that started production before 2008, which are excluded from these presentations.
For these presentations, I used data gathered from the following sources:
- Texas RRC. Oil production is estimated for individual wells, based on a number of sources, such as lease & pending production data, well completion & inactivity reports, regular well tests, and oil proration data.
- OCD in New Mexico. Individual well production data is provided.
- FracFocus.org
====BRIEF MANUAL====
The above presentations have many interactive features:
- You can click through the blocks on the top to see the slides.
- Each slide has filters that can be set, e.g. to select individual or groups of operators. You can first click “all” to deselect all items. You have to click the “apply” button at the bottom to enforce the changes. After that, click anywhere on the presentation.
- Tooltips are shown by just hovering the mouse over parts of the presentation.
- You can move the map around, and zoom in/out.
- By clicking on the legend you can highlight selected items.
- Note that filters have to be set for each tab separately.
- The operator who currently owns the well is designated by “operator (current)”. The operator who operated a well in a past month is designated by “operator (actual)”. This distinction is useful when the ownership of a well changed over time.
- If you have any questions on how to use the interactivity, or how to analyze specific questions, please don’t hesitate to ask.
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11 Comments
for the first time in history, 50% of all rigs drilling horizontal wells in the Lower 48 are in the Permian basin:
Gas production has increased from 6.55 BCF/day in January 2018 to near 11 BCF/day and it is getting gassier by the day. At these NG prices, flaring is done extensively. When NG was placed in pipelines, there is negative royalty payment for NG.
NG and NGL handling should limit production as they grow faster than oil.
Talk about waste of natural resources, the E&P companies have done it.
Enno
Do you think that after revisions are made to March and April, that April will still be lower than March?
To me, it looks like decline rates are accelerating…2018 wells have already decline by 33% from 2019 levels through April. Probably to tight spacing. This can be fixed, but would imply that overall resources in these basins are much lower than originally envisaged.
Enno, forgive me for posting this here on your fine site but, hey, I’m using your stuff, bro!
Alex, your comment is very important and I agree, accelerating decline rates in the Permian beg different USGS and EIA estimates of technically recoverable reserves in both sub-basins, all of which were made originally based on “type curves” per bench extrapolated over millions of acres, as though all things in the oilfield were created equal. They most certainly are not. America has been whining for decades about lack of reserve transparency in the Middle East; frankly ours, at the moment, is far worse.
https://www.oilystuffblog.com/single-post/2019/07/28/In-the-Oil-Business-What-Goes-Up-ALWAYS-Comes-Down
tnx for the link Mike. I got my Eureka moment with respect to shale when reading their Investor Presentations and could not understand the economics and very little explanation was given. Just getting more productive, wells are improving, costs are down, but then you read the financials and it is just a mess.
If you have a profitable business, let investors know, do not try to muddy the water. Why not just be honest and open about the economics?
To me, this sites more or less explain the missing link, which is decline rates eating up whatever profit is left
Ovi,
It’s a good, but hard question. On the one hand, the size of the revisions is changing, and on the other one, we are getting better in utilizing ever newer data to limit upcoming revisions (we made a big improvement in the past month). I think it is slightly more likely that yes, April production will be lower than March, after all revisions are in.
Enno,
I’ve noticed a growing disconnect on DUCs between your data and the EIA DPR data for comparable periods. For example your data reflects a sizeable decrease in Permian DUCs, from 2,112 in Apr 2018 to 724 in Apr 2019. The EIA DPR reflects a DUC inventory of 2,438 in April 2018 (similar to your April 2018 data), which increases to 3,895 wells in April 2019.
Just wondering if you could share some insight here as it implies very different rig productivity with the underlying data, i.e. using your data implies that the current Permian focused rig count does not support the current level of completion activity as DUC inventory is shrinking, while the EIA DPR data suggests the rig count could drop further and support the current completion activity.
Thanks,
Mike V
Mike,
We determine the DUC count based on actual completion reports (W2 forms in Texas). Unfortunately, there is often a significant delay between the time that a well is drilled, and the moment that the well completion form is published by the TRRC.
I believe that our DUC count is pretty accurate up until about May last year (see screenshot below). After that, you see a significant drop in newly drilled wells, which is not the reality.
The EIA tries to model these missing events, whereas we base it (at the moment) on hard data.
From a quick comparison, I see that their numbers match ours quite well until ~May 2018. From that month onward, it is clear that our numbers are too low (due to missing completion reports), but I can’t say much about how accurate their model is. I aim to do more about this in the future.
Enno,
Incredibly helpful. Keep up the great work!
Thanks Mike!