US Land Drilling to Increase 14.2% in 2018
US land oil & gas operators report plans to drill 14.2% more wells in 2018 versus 2017 and Canadian oil & gas operators report plans to drill 18.4% more wells in 2018 versus 2017.
Kimberlite Oilfield Research recently updated the 2018 drilling forecast based on interviews with over 150 completion engineers and over 150 drilling engineers from more than 100 E&P operators in North America.
The updated forecast reveals that North America oil & gas operators remain optimistic overall and plan to continue their drilling operations into 2018 at levels very close to the current activity seen in the market today.
Keep in mind that US land entered January, 2017 with only 640 drilling rigs operating and US land operators gradually increased the number of drilling rigs operating in the US land market to over 900 drilling rigs by the summer of 2017.
Maintaining drilling activity levels in 2018 at the current rate of approximately 900 drilling rigs in US land results in the forecast increase of 14.2% for US land. The Permian basin leads the US land 2018 forecast with an estimated 31.8% increase in the number of wells to be drilled in 2018 versus 2017 followed by the Eagle Ford with an estimated increase of approximately 13.0%. Canadian operators report plans to increase drilling by approximately 18.4% in 2018.
With oil prices stabilizing in the $50 to $55 range and oil & gas operators continuing to drive drilling and completion efficiencies to new levels, it is reasonable to assume that oil & gas operators will be able to enjoy a full calendar year in 2018 with approximately 900+ drilling rigs operating resulting in the associated increases in drilling noted in the table above. Adherence to market discipline and a focus on profitability by the oil & gas operators will also help to stabilize these elevated levels versus that observed in the trough of the 2015 and 2016 market downturn.
It is important and impressive to note that while US land oil & gas operators have increased the average lateral length of their unconventional wells by 20.3% in the past year, the actual number of days to drill a well has decreased by 5.8% highlighting the level of efficiencies achieved in the market by the oilfield services companies and the oil & gas operators. Being able to drill wells faster is resulting in the ability to drill more wells with fewer drilling rigs than prior to the 2015 market downturn.