In a recent report, the IHS revealed that Eagle Ford producers have built a large inventory of over 1,400 wells that have been drilled but not completed.
Related:Eagle Ford Rig Count Drops to 137
Drilled but uncompleted wells (DUCs) offer an attractive economic alternative for producers who are looking for ways to cut costs in this crude pricing slowdown. A DUC can be converted to a producing well for 65% of the cost of new drilling, which will likely incentivize operators to work through these inventories as oil rices rebound.
BHP, Chesapeake, Anadarko, EOG Resources, ConocoPhillips and Pioneer Resources own nearly 40 Percent of the optimal DUC wells in the Eagle Ford. The report estimates that BHP, ConocoPhillips and Pioneer Resources have better potential in their delayed wells and the greatest available options of any operators in the play.
Raoul LeBlanc, senior director of research at IHS Energy, said the drilled but uncompleted wells have two advantages under current market conditions.
“First, the drilling costs of these wells were already incurred by operators prior to 2015, and the completion costs — which comprise the majority of well costs — can be negotiated at a cheaper rate since completion crews are now both available and available at cheaper rates. Second, if completion costs are fairly consistent in the play, then it stands to reason that wells with higher production will yield better returns on capital.”
Read more at ihs.com