Quack!

Click to enlarge all charts, please. Courtesy shaleprofile.com 

 

 

Sixty two percent (62%) of all DUC's in the Permian Basin are located in just four counties in the Delaware Basin. Whazzup with that ? 

 

 

One of the reasons might be that  the average gas to oil ratio in the Delaware Basin, known to be gassier than the Midland Basin, is 4.2 MCF/BO;  in Eddy, Lea, Loving and Reeves Counties thru July 2020 the GOR was 5.32. These counties represent very  gassy pasture  in the Delaware Basin with associated gas often making up 40-45% of the revenue stream and gas prices have...sucked.

 

In fact, what four counties in the Permian Basin flare the most associated gas? You guessed it:   

 

These four counties also have been getting hammered the last four years with wells including a giant, giant effort at down spacing in the Wolfcamp beginning 2015, from an average spacing between wells of 1,470 feet down to less than 700 feet by 2019.

 

Well, guess what? Down spacing and the relationship between parent/child wells ended up being pretty much an economic bust, as this PE suggests in Lea County, New Mexico, below.  So another reason this is DUC country is they flocked these DUC's  too close together and have now decided its not worth  completing a bunch of them. 

 

Look what happened to parent EUR's in Lea County when they started cramming wells too close together. 

 

DUC's are the dumbest thing the shale oil industry does. 

 

Nobody, I don't care how big, or how much of other people's money you have, wants to spend $3MM on a well to set pipe on it and let it sit for years without generating income. While your paying interest on the $3MM?! Gimme a break. That is deployed capital not getting a return. Most of these DUC's were drilled in these four counties when oil prices were in the high $50's to low $60's...now the price is in the high $30's. Smart, uh? 

 

According to shaleprofile.com in the past 12 months 40% of all reported DUC's in the Permian have been completed (cheaper than drilling new wells) but only 20% of DUCS  in Lea, Eddy, Loving and Reeves have been completed.  

 

 

Now THIS was real  DUC. Its was a dirty DUC because it had been raining for two months and we never got a chance to paint it.  The location in this photo is closed  and slicked off nicely but it is a giant mud hole looking for a place to occur. The well is buttoned up waiting on sunshine (cheaper than limestone) and there is, of course, no pressure involved because the well has not been perforated. The bull plug tacked onto the pup joint and set in the wellhead slips is to keep the dreaded loup garous from entering the wellbore and causing problems later. Bastards. 

 

Once this well got de-DUCted it was a good well, is making money even at <$40 WTI, and has three more nice plug backs up the hole and behind pipe. This well only stayed a DUC for 2 1/2 months because...I was spending my own money. 

 

Other people's money does weird things to people.  In the end I'll betcha a cold beer that more than 60% of wells in America reported to be DUC's, never get de-DUCted. 

 

 

 

Could it be that all "DUC's" drilled before 2016 are actually dead DUC's? 

 

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