Rystad Energy's Perspective | Russell T. Rudy Energy LLC
“Oil Voice” recently published an article by consulting group Rystad Energy in which the authors shared their perspective on the first half of 2016 and their forecast for the second. They note that when oil prices approached $50 per barrel in June, some operators immediately began activating rigs in the most prolific shale areas. Concho added seven rigs and Energen, six, all in the Permian Basin of West Texas and Southeastern New Mexico. Overall, shale drilling activity increased 5% in June. Rystad concludes that this means that the oil rig count has reached the bottom. However, major shale players like EOG, Chesapeake, and Devon will probably wait for further signs of recovery before increasing drilling.
Rystad sees increased drilling and decreasing DUC (drilled but uncompleted wells) inventory leading to increased shale production by the end of this summer and continuing each month through yearend. They note that shale production has been surprisingly stable so far this year, falling off only 100,000 barrels of oil per day from January to June.
In the first half of 2016, drilling activity was primarily focused on core plays where wells had positive economics at $40 per barrel. Rystad predicts that even at a sustained price of $50, this will continue to be the case. In fact they foresee 70% of second half drilling being concentrated in the Eagle Ford in South Texas, the Bakken of North Dakota, the Permian Basin and the Niobrara in Colorado.
Finally, Rystad sees prices exceeding $50 in early 2017 which could lead to a resumption of drilling in non-core areas.
To read the article in its entirety, which includes some very good graphs, please go to http://www.oilvoice.com/n/2016-first-half-review-for-shale-shows-the-bottom-has-been-reached-Whats-next/ef094ea13142.aspx .
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.
