Good article Mr. Moors, however I believe US production will be far lower than down 100K BPD. IMO the lack of declines in US onshore production has more do to with the overhang of uncompleted wells drilled in 2014 and early 2015. One company that runs frac tools had 3000 systems in the ground un-fracked in May of last year, thats just one company. It would take 125 drilling rigs working all year to drill just those 3000 wells. 450 to 550 rigs cannot keep production flat at 9.0 MBOPD. It appears we are starting to see declines over the past month, time will tell. I think US liquids production will be under 8.5 MBOPD by mid Q4, that's off from 9.3 MBOPD in November of 2015. 500 Drilling rigs, after the frac-log is done (Q2-Q3), would likely result in a 5 to 10% yearly decline in production. Producers are overproducing wells in an effort to increase cash-flow, this will accelerate declines in early 2017. The completion and drilling differences between 2 years ago and 2000 drilling rigs versus today and 450 drilling rigs are minimal. As you say many companies will go BK and the others will spend years repairing balance sheets, we probably will not see 1250 drilling rigs in the US for quite some time even in an oil recovery to the mid fifties, low sixties. Access to high yield debt will be much lower than previous years. The seeds are being sowed for the next oil price jump, going to be very volatile, although nothing like 2009's V recovery.
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The Elephant In The Oil Well That No One’s Talking About
Good article Mr. Moors, however I believe US production will be far lower than down 100K BPD. IMO the lack of declines in US onshore production has more do to with the overhang of uncompleted wells drilled in 2014 and early 2015. One company that runs frac tools had 3000 systems in the ground un-fracked in May of last year, thats just one company. It would take 125 drilling rigs working all year to drill just those 3000 wells. 450 to 550 rigs cannot keep production flat at 9.0 MBOPD. It appears we are starting to see declines over the past month, time will tell. I think US liquids production will be under 8.5 MBOPD by mid Q4, that's off from 9.3 MBOPD in November of 2015. 500 Drilling rigs, after the frac-log is done (Q2-Q3), would likely result in a 5 to 10% yearly decline in production. Producers are overproducing wells in an effort to increase cash-flow, this will accelerate declines in early 2017. The completion and drilling differences between 2 years ago and 2000 drilling rigs versus today and 450 drilling rigs are minimal. As you say many companies will go BK and the others will spend years repairing balance sheets, we probably will not see 1250 drilling rigs in the US for quite some time even in an oil recovery to the mid fifties, low sixties. Access to high yield debt will be much lower than previous years. The seeds are being sowed for the next oil price jump, going to be very volatile, although nothing like 2009's V recovery.