Well Count to Drop by 26% ? | Russell T. Rudy Energy LLC
According to a recent article in “Rigzone”, consulting firm Wood Mackenzie projects a 26% reduction in domestic onshore wells, down to 27,000. Oil and gas operators have reduced budgets for 2015 in response to falling oil prices. With drilling and completion expenditures projected to drop from $140 billion last year to $90 billion in 2015, rig counts, completions and well counts are all expected to follow suit.
This reduction in demand for drilling and completion services will translate into lower day rates and prices for well stimulations, tubulars, frac proppant, pressure pumping, and other oil field goods and services. For example, day rates for drilling rigs are expected to drop by 30% and the cost for frac jobs by 15%. While operators might not feel drilling new wells makes economic sense, refracing existing wells might. Consequently, demand for these stimulations will not drop as dramatically as that for rigs.
The most precipitous declines in well activity are projected in the oil prone plays such as the Niobrara (primarily in Colorado) and Bakken (primarily in North Dakota), as opposed to the Marcellus shale (primarily in Pennsylvania) which is predominantly gas prone and close to markets.
To read the article in its entirety, please go to www.rigzone.com/news/article_pf.asp?a_id=136910.
