[Observerbrb]

PS. I don't understand this data variability... could anyone explain it?

[ROCKMAN]

O - I would give it a try but I'm not sure what "data variability" you're referring to. Do you meant the increase in the decline in the rate? First, that increase from 55k to 85k doesn't seem significant IMHO. Could just be a statistical variation. OTOH it does fit obvious expectations. Ignore the drop in rig count...for the moment. Production declines: older wells decline at a slower rate but wells drilled in the last 12 months before the slump began are declining at a 40%+ rate. But in combination obviously all existing wells are declining. Offsetting that decline would be the production coming from wells being drilled since the rig rate fell around 50%. Someone who has closely watched production from recent drilling might be able to model if the effect will be a net increase, decrease or flat. That is not me. But one thing is absolutely certain: the rate of production increase seen before the drill rig count collapse will not be seen going forward.

But the good news: we don't need to spin our wheels try to model the dynamics: just wait until next December or so and the trend should become fairly clear.

[Pops]

Director's Cut says there are still 880 wells waiting on complete in da bacon as of the end of March. Says it takes around 120 new completions to break even and in March they brought on 240. It also says there were close to 200 permits written, 168 for April. Not sure whether that is indicative of anywhere else, I don't know where to easily find info about EF or other places.

That gives a backlog of what, 3-7 months anyway, without drilling one new well.

[ROCKMAN]

Pops - "That gives a backlog of what, 3-7 months anyway, without drilling one new well." And that's about the same backlog there was before the drilling slump. That's why I keep pointing out we won't see the effect on production until late summer/fall. In fact, if some operators have actually voluntarily delayed frac'ng a significant number of wells longer than the normal lag time we should be seeing an even stronger fall off in production: remember a well drilled and not frac’d is the same as a well not drilled from a production standpoint.

As far as “permits” I assume you mean drilling permits for new wells. In Texas drill permits are good for 12 months and companies usually try to have them approved many months ahead of the time they’ll actually need them. And yes: there are permits issued on wells that never get drilled. A permit to drill is a requirement…not a commitment. I suspect we’ll see hundreds of EFS permits expire in the next 12 months as those wells aren’t drilled.

What EFS info are you looking for?

[Pops]

Director's cut on 5/13 last year said 635 wells waiting; in May 2013 is was 440, so at 880 this year it has gone up some, well, double 2 years ago actually. I think the big bump in new wells in March with 240 new wells online pretty well confirms the "fracklog" idea doesn't it?

As soon as price rises enough there will be additional increases in wells online.

https://www.dmr.nd.gov/oilgas/directors ... rchive.asp

I was wondering if TX had a similar report that would show wells drilled but waiting.

[Synapsid]

Pops,

Ron Patterson follows the Bakken in excruciating detail over at his site, with help from several well-informed commenters. Rockman reminds us that any aspect of the oil patch is much more complex than it appears to be if you look at it, and those guys at Ron's are doing the detailed looking. Makes my head ache, but you can begin to zero in on how many wells in what status there are in the Bakken.

[Pops]

$this->bbcode_second_pass_quote('Synapsid', 'P')ops,

Ron Patterson follows the Bakken in excruciating detail over at his site, with help from several well-informed commenters. Rockman reminds us that any aspect of the oil patch is much more complex than it appears to be if you look at it, and those guys at Ron's are doing the detailed looking. Makes my head ache, but you can begin to zero in on how many wells in what status there are in the Bakken.

[ROCKMAN]

Pop - In Texas no one has a record of how many wells have been drilled that are yet frac'd. Folks are free to guess all they want. But the companies aren’t supplying the detailed data and the TRRC doesn't require notification. Only one way to add the numbers up: wait for the TRRC to post the first production from new EFS wells. That's the only way to make a guess. But remember besides the lag time waiting on a frac crew in can take a month or two to set up the production equipment. And then the company doesn't report production to the TRRC until the month after it begins producing…and sometimes it can be a month late with the data. And then it can take 1 to 2 months for the TRRC to post the data. And I don't go to the TRRC for production data...not very use friendly. So I wait for Drilling Info to gather the data and post it. The data being posted on DI today is for wells first producing in Feb/March.

Bottom line: the production posted for March is wells that still were drilling in 4Q 2014...some maybe longer ago. Just watch for the numbers of new EFS wells coming on production. I wouldn't expect to see a significant drop off in those wells until the June+ given those would be the wells that were drilling in Jan 2015. And given the rig drop wasn't in full swing until after Jan it will be another 4 or 5 months before you can get a sense of how many, if any, operators voluntarily stalled their fracs.

So here’s some real data for you to chew on. From Drilling Info I pulled up all the EFS wells that have begun producing since last August…725 of them. Here’s the number that began producing each month since then:

Aug – 103
Sept – 131
Oct – 127
Nov - 171
Dec – 198
Jan – 90
Feb – 103
March – 4 See what I mean about late reporting. I wouldn’t accept the March count for at least another couple of more months. There were certainly more than 4 wells that began producing that month.

First notice how the count is rather erratic from month to month. So Feb is down a good bit from Dec but Dec is very anomalous and much higher than Aug. And Feb is the same count as 7 months ago…long before the rig count fells. And remember the wells that began producing in Aug 2014 were probably being drilled 4 to 6 months earlier...way, way before the rig count drop. So there you go Master of the Graph: plot it out and tell us where we’re heading the next 6 months. I think I'll just wait till next December and make my predictions for the next 6 months…from today. LOL.

[Synapsid]

Pops,

Just pointing out a resource.

[ROCKMAN]

Looks like the net work has a guaranteed plot twist (thanks to the drilling bust) for this new series starting soon:

OIL" (ABC): The biggest oil discovery in American history (bigger than Texas and as big as Saudi Arabia) has triggered a geopolitical shift and an economic boom in North Dakota on a scale not seen since the American 1849 Gold Rush. This series tracks the epic pilgrimage of a young, ambitious couple to the oil fields of the Bakken seeking their fortune and a better life — it’s a classic tale with modern twists. As we follow their trials and tribulations in a modern day “Wild West”, they negotiate a colorful ensemble of roughnecks, grifters, oil barons, criminals, and fellow prospectors against a stark and beautiful backdrop.

Maybe Rockman can get a cameo explaining PO. Hey, who's more credible than an old gray haired geologist in a wheelchair? LOL.

[Tanada]

$this->bbcode_second_pass_quote('ROCKMAN', 'L')ooks like the net work has a guaranteed plot twist (thanks to the drilling bust) for this new series starting soon:

OIL" (ABC): The biggest oil discovery in American history (bigger than Texas and as big as Saudi Arabia) has triggered a geopolitical shift and an economic boom in North Dakota on a scale not seen since the American 1849 Gold Rush. This series tracks the epic pilgrimage of a young, ambitious couple to the oil fields of the Bakken seeking their fortune and a better life — it’s a classic tale with modern twists. As we follow their trials and tribulations in a modern day “Wild West”, they negotiate a colorful ensemble of roughnecks, grifters, oil barons, criminals, and fellow prospectors against a stark and beautiful backdrop.

Maybe Rockman can get a cameo explaining PO. Hey, who's more credible than an old gray haired geologist in a wheelchair? LOL.

[ROCKMAN]

It will be interesting if they use the same set of caricatures they used in "Dallas". A good bet IMHO: Hollywood will have to follow the public prejudice if they want to have a hit. As I offered they have the oil price crash to center on in their second season...if they have one.

[ROCKMAN]

I would expect a snipping event or two. Lots of open ground to make 1,000 meter plinks. But not at a Mas Max level: too freaking cold for much of the year to spend that much time outdoors.

[ROCKMAN]

pstarr - Knowing how Hollywood works they'll likely have an episode where they show sneaky Saudis roaming the countryside sabotaging production in an effort to increase KSA market share. If only those bastards would cross into Canada and start messing with the oil sands. LOL.

[ROCKMAN]

Pops - here's another possibility if the "frac log" has increased: lack of frac crews as opposed to operators choosing to delay frac's. I'm hearing more stories of operators having trouble finding a variety of services. The service companies have a long history of pulling the plug quickly when a slump hits. And they are good at staying ahead of the curve: I've gotten calls from no less than 20 vendors asking for my plans for the rest of the year. The quickest way for a service company to increase net income during a slump is to lay off hands ASAP. I now one driller that cold stacked 11 of his 12 rigs: you want him to drill for you then you get put on a wait list. Last I heard is was 2 to 3 months.

I haven't heard anything specific about frac crews but Halliburton has laid off over 11,000 hands. If the frac companies see a drop in demand coming they'll start cutting overhead very earlier to preserve capital. And when all the frac'ers cut crews and the wait time increases it also allows them a bit more leverage in pricing.

But as I pointed out earlier if there is an additional lag time in frac'ng (regardless of the cause) it would effectively be the same as those delayed wells not having been drilled in the first place. IOW a well drilled in Nov 2014 that isn’t frac’d until Nov 2015 will have the effect on production as a well drilled 10 months later in September. Which would be the same as effectively reducing the number of wells drilled (as well as their contribution to production) from what the current drilling stats would indicate.

IOW a shale well isn’t a producing well regardless of when it was drilled: it’s not a shale producer until frac’d and turned on. So if 400 to 800 wells have had their fracs delayed it would be the same, from a production standpoint, as if those wells weren’t drilled in the first place. Falls into the category of not being able to save (drill) your frac’d cake and eat it (produce it) to. LOL.

[Pops]

Sure, I get ya. I'm not trying to guess why there is a wait list, that is way above my pay grade. I've always assumed (because the list has been growing for several years) that it is simply because it takes longer to complete the well than it does to make the hole.

My point is only that counting rigs doesn't give much of a picture of the short term since even if drilling stopped entirely this instant there is a 4-6 month supply of holes to frac before production would change.

[ROCKMAN]

Pops - "...because it takes longer to complete the well than it does to make the hole." Actually the combined time to drill and then later frac a well can add to about 4 to 6 weeks. But the combined time waiting on a frac crew and then putting the production equipment together after the well is frac'd can take 12 to 24 weeks.

Yes: we spend a of of time sitting on our thumbs. LOL

[Pops]

ther ya go, thanks ROCK