DUC to Come Online | Russell T. Rudy Energy LLC
There has long been speculation as to the crude oil price necessary for shale operators to frac drilled but uncompleted (DUC) wells, also known as the “fraclog”, and start drilling new wells. According to a recent article in “World Oil”, we now know the answer, at least for one company.
With crude prices doubling from 12 year lows to about $50 per barrel, Continental Resources Chairman and CEO, Harold Hamm, says that his company is already completing DUC wells. Continental is the largest operator in the Bakken shale of North Dakota. However, state regulator, Lynn Helms, feels that most operators will require a price of $55-60 before they follow suit. Here again, Hamm appears to be out front: when prices pass $60 his company will start drilling new wells.
Hamm’s optimism is based on his belief that the tightening balance between supply and demand means prices will continue to rise. He foresees demand exceeding supply by 2 million barrels of oil per day in the not too distant future and feels oil prices could reach $70 per barrel by the end of this year.
At the end of 2015 there were 4,290 DUC wells in the U. S., concentrated in the Bakken shale and the Permian Basin of West Texas and Southeastern New Mexico. Some analysts fear that when these wells come on stream, the incremental supply could exert downward pressure on prices. Apparently, Hamm does not share this concern.
Conversely, Hamm believes that recovering prices will end the wave of bankruptcies among shale drillers. An outspoken industry advocate, Hamm has been an energy advisor to presidential candidate Donald Trump since 2011. Hamm says that contrary to how he appears in public, the candidate is “…someone who is very willing to listen to folks that he believes.”
To read the article in its entirety, please go to http://www.worldoil.com/news/2016/6/9/shale-king-harold-hamm-fracing-unfinished-wells-after-rally-to-50 .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
