Also in this news brief – 1) McKinsey Insights’ “North American Shale Oil Outlook to 2025” 2) Shale drillers turn to refracturing wells 3) US drillers spend big on “super-spec” rigs
Canada imports more than twice as much per day as next leading importer of US oil (China)
Reuters – U.S. crude oil exports reached 1.02 million barrels per day in May, slightly higher than the 1.00 million bpd in April, foreign trade data from the U.S. Census Bureau showed on Thursday.
Exports to Canada were 372,000. Exports to China were 147,000. Exports to Netherlands were 108,000. Exports to Malaysia were 68,000. Exports to United kingdom were 63,000. Exports to Colombia were 48,000. Exports to Curacao were 32,000. Exports to Peru were 25,000. Exports to Bahamas were 23,000. Exports to Spain were 23,000. Exports to Norway were 22,000. Exports to Italy were 22,000. Exports to France were 21,000. Exports to Korea, south were 16,000. Exports to Dominican republic were 16,000. Exports to Japan were 10,000. Exports to Argentina were 9,000.
Highlights of McKinsey Insights “North American Shale Oil Outlook to 2025”
McKinsey Insights – US shale production could surge to 9 million barrels per day by 2025 if West Texas Intermediate prices stabilize between $60 and $70 per barrel, according to a report from McKinsey Energy Insights. Under this scenario, shale drilling and completion activity would increase at a 20% annual rate while production would grow by 12%.
- The Permian’s average core break-even price for 2017 is less than $41/b. Low breakeven is enabling the Permian to remain profitable despite well cost increases of 30%.
- The Permian is experiencing 10 times the IP of Eagle Ford and Bakken combined. The Permian’s IP growth rate for the past 5 years was 20% compared to Eagle Ford and Bakken (2%), and the Permian has more remaining drilling locations as it is still in the early development stage.
- Total capex will grow at 25% p.a. through 2021. Increased drilling and completion activity will require total capex spend to grow to near 2014 spend levels; however, production will have nearly doubled since 2014.
- Drilling and completions to grow by 20% p.a through 2021. Under the base “Price Recovery” scenario (WTI $65-70/bbl from 2019 onward), drilling and completions are expected to grow rapidly at 20% p.a., and production will grow at 12% p.a. through 2021.
Shale drillers turn to refracturing to improve productivity, efficiency
Hart Energy – US shale producers are increasingly opting to refracture existing wells instead of drilling and completing new ones to improve productivity and reduce costs, write Riley McFall of Sundance Energy and Jason Baihly, Garrett Lindsay, Kevin Mullen and Jung Shin of Schlumberger.
In its early years, refracturing delivered mixed results, but improvements in connectivity, data collection and treatment designs together with a better understanding of the technique made refracturing more efficient and popular.
US drillers spend tens of thousands on “super-spec” rigs, Canadian rig supplier Xtreme Drilling Corp. now has 3,000 operating days under term contract
Houston Chronicle – US oil companies are spending up to $23,500 per day to contract “super-spec” rigs, which drill wells faster than older rigs, as producers become more willing to pay 10% to 20% more than spot rates in the Permian Basin and the Eagle Ford Shale for more efficient drilling.
Super-spec rigs can cut the time needed to drill a well to under 10 days.
Xtreme Drilling Corp., a Canadian rig supplier, said this week it has locked in more than $24 million in revenue over the next year with three contracts for upgraded super-spec rigs, pushing the rig day rates toward $22,000 a day.
Xtreme recently finalized 18-month term contracts for the remaining two 850XE drilling rigs. Both rigs will
work for the same customer in the Utica play of the Appalachian Basin. It is anticipated these two rigs will
commence operations in the mid- and late-fourth quarter of 2017, respectively.
The operator is a leading Utica E&P Company with multiple rigs under contract and a significant backlog of wells to be drilled.
Xtreme previously announced the first of three 850XE rigs was contracted to an operator in Oklahoma on a
two-year term contract and should commence operation around September 1, 2017. The incremental
revenue from these three 850XE rig contracts is estimated to be more than $24 million USD in 2018.
In addition, the Company recently finalized new term contracts on two XDR500 rigs in the DJ Basin of
Colorado. These contracts will extend these two rigs through October 2018 and January 2019,
respectively.
In total, the Company now has more than 3,000 operating days under term contract. This is
an increase from approximately 240 days under term contract at the end of the first quarter of 2017.
The remainder of the Company’s active rigs operate under multi-well or well to well contracts.
Xtreme currently has eight of 10 XDR 500 rigs operating with the ninth XDR 500 contracted and anticipated
to commence operations by the end of July.
The Company also has one XDR 200 rig currently operating in North Dakota.
