Rosetta Resources Has Yet To Complete 23% of Its Drilled Eagle Ford Wells

Rosetta Eagle Ford Asset Map - June 2013
Rosetta Eagle Ford Asset Map - June 2013

Rosetta Resources has completed 180 Eagle Ford wells and has 53 wells drilled and awaiting completion.

To put it another way - approximately 23% of the wells the company has drilled to date are sitting idle waiting to be completed.

Based on rough estimates, that means completion crews are a little more than six months behind drilling operations.

Even though an additional rig will be added in the fourth quarter, Rosetta is expected to begin working off the backlog of drilled wells as it transitions into 2014.

Rosetta’s third quarter production results continued on a record pace and demonstrate our ability to maintain development of our core Eagle Ford position while integrating the Permian Basin assets into our operations....
— Jim Craddock, CEO.

Rosetta's daily production was up 33% over the same quarter in 2012 and up 3% over the second quarter to 48,500 boe/d. The company operated five rigs in the third quarter and is expected to run six rigs in the fourth quarter. At Gates Ranch, the company will run 2-3 rigs.

The company's Karnes Trough leases are now fully developed.


1,500 Eagle Ford Wells Waiting to Be Completed?

Are there really as many as 1,500 wells sitting idle until a completion crew arrives on the scene? Comments regarding the size of well backlogs is coming up more frequently. At Bentek's Benposium a few weeks ago the comment was made that Marcellus production would grow through the end of the year even if operators stopped drilling. Wow. We're in a similar situation in the Eagle Ford. If you carry the trend forward, the play will be approaching 2,500 producing wells by the end of June 2012. Add a well backlog of 1,000-1,500 and you see why analyst are raving about production growth. Estimates of 1,100-1,200 are the most common, but we've seen 1,500 mentioned by the most bullish analyst.

If 1,500 is correct and service companies catch up, the producing well count will grow by 60% without any drilling. Drilling has raced ahead of completions by 4-6 months. That's not sustainable. Operators don't make a return until wells start flowing. Expect a big push in 2012 to drive inventories down.

Consider the +/-250 rigs that are drilling and we're getting +/-250 wells drilled and awaiting completion each month. Drilling at this rate isn't going to ease pressure on service companies.

How Big is a Normal Eagle Ford Well Back Log?

That should be the first question everyone asks. At first blush, I don't know what is normal, so 1,000 wells sounds like a lot, but maybe not......

In an area with infrastructure constraints, I'd expect the well back log to be higher than other areas of the country. A 1-2 month backlog wouldn't be surprising. Waiting six months to bring a well online after drilling is completed is a problem. Don't expect this trend to last. Capital budgets for most operators are already pressured by low natural gas prices. Infrastructure and service constraints aren't going to make any management team happy. My estimate is we'll approach a normal inventory of 1-2 months over the next two years. At that time, most operators will be in full development mode and the constraints of today will be behind us.

I'd love to hear what you guys are seeing in the field. Is your company catching up? Share your experience in the comment section below: