Oily Stuff
            Oily News, Analysis & Opinions
      Oily Photographs, History, Videos & Cartoons
Oily Humor & Short Stories  About a Very Long, Oily Life
Stuff To Think About
Video Stuff
Quote Stuff
“I kind of pitch this whole thesis of the 'bulletproof barrel' – the barrel produced in the Permian Basin is the lowest cost, lowest environmental footprint, best regulatory environment in the world," Van't Hof said. "Well, what other barrel in the world would you want to produce ahead of that barrel?
And that’s why I think we’re going to be around a long time.”
Lea and Eddy Counties, New Mexico, above. Without these two counties, and a half dozen major operators like Chevron, Oxy, Devon, EOG and Exxon drilling wells, one after another in these two counties, the Permian Basin would be in decline. A few months ago, for the past two years, Lea and Eddy County had over 1/3rd of the total Permian rig count.
This production is for all of 2023 and pretty much finalized by April of 2024 when these charts were updated.
​
On the left. drilling longer laterals in these two counties kicked into high gear in late 2022. Because of lag time, production increases from these long laterals did not show up until 2H23 and volumes shot up as a result. Some of the IP60's from these new long wells were awesome (3,500 BOEPD) but whoa Nellie, did they then decline. If you had been standing behind that decline you have gotten sucked off your feet.
​
On the right, decline rates in these two counties for 2023 ended up averaging 75% over the next 10 months, more decline than previous years, in spite of the longer laterals.
In the bottom half of the chart on the right is cummulative production at given 12 month intervals.
2023 production at month 12 is clearly less than previous years going all the way back to 2020, perhaps even 2019. These cummprod profiles are not EUR's but can be used to predict the direction of EUR's and it is clear that 2023 wells are not as productive...in spite of high IP60's.
Please don't confuse big up-front numbers post frac, with productivity.
EUR is all that matters. The goal is NOT to breakeven, it is to make lots of money and get out of debt!
​
Longer laterals are the fad because they make for greater cash flow on the front end and the sector has to have lots of cash flow to stay on the drilling hamster wheel. But there is only so much room left for 3 miles laterals in core areas that are packed with 8,000 foot laterals. The fad won't last very long. When all the long lateral vacancies are gone, shit is going to hit the fan, fast.
The first place to watch for this is Midland County, with Exxon.
Sign In:
Readers can subscribe to the blog to
to receive notices of posts and can become a site member to participate in forum discussions. Sharing your email address would be dishonest and I don't do that kind of stuff. You can unsubscribe anytime, for any reason.
I do this blog stuff for fun, not to make money. I am not trying to sell you anything.
The materials provided on this site are for informational and educational purposes only and are not intended to provide tax, legal, or investment advice. I may make data related mistakes occasionally; if you use my opinions about oil reserves or shale well economics for financial purposes, to buy or sell stocks, your nuts. Don't do that. If I have used a photograph incorrectly it was for educational purposes and I have done my best of to give credit where credit is due. My stories are all true, slightly embellished, perhaps, but true; I don't change names to protect the guilty. I am as accurate as possible about history and historical facts; I work very hard at that.All rights are reserved, whatever that means. Don't blame me, I didn't do it.