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High-Grading Rig Activity - Don’t Call It a Comeback

Bio
Author

Steve Diederichs, Vice President

Author Biography

Steve joined RSEG in 2018 and works as an analyst on the Rockies Intelligence team where he focuses on characterizing well design and performance using multivariable analysis techniques. Previously he worked for three years in the field with Schlumberger as a field engineer on a hydraulic fracturing crew in the U.S. He completed numerous wells in the Marcellus, Utica, Haynesville, Eagle Ford, Wolfcamp and Sprayberry formations between 2015 and 2018. Steve graduated from Queen’s University in 2015 with a B.Sc. in geological engineering.

The recent collapse in oil prices forced a dramatic drop in activity as operators slashed budgets and curtailed volumes to avoid producing into an uneconomic environment. Service cost reductions and adjustments to spacing and completion designs can work to drive breakevens down, but as prices recover, we expect to see high-grading that will return activity to areas with the highest-quality rock.

In the Bakken, we view the Fort Berthold Indian Reservation (FBIR), Nesson Anticline and Little Knife sub-plays as the core of the play with recent wells that break even at ~$40/bbl WTI. Today, these regions hold 70% of active rigs in the play (Figure 1) and nearly 90% of 2Q20 wells reported to date (Figure 2). Operators without exposure to core acreage will require higher oil prices to bring activity back. Users of RS Core can easily access active and historical rig data to analyze which operators are increasing activity levels and whether a region being drilled is economic in today’s price environment. 

FIGURE 1 | Active Rigs in the Bakken by Operator

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FIGURE 2 | Distribution of Recent Bakken Wells Across the Core and Non-Core Sub-Plays

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