It’s time for the last Technical Tuesday of the year, and where else to finish but the same spot we started: looking at DUCs in the key oil basins (drawing from ShaleProfile Analytics and EIA data).

First, let’s start with the definition of a DUC. It is drilled, uncompleted well. Lots of people question the EIA data but don’t provide a better number. Importantly- it’s a consistent methodology and that tabulates 3 things: 1) # wells were drilled in a basin 2) # wells completed 3) the running difference is the DUC #.

Since May of ’19, the DUC number has been falling in as HZ rigs fell from 948 to 700 and completions stayed flat. October oil production was 12.66 MMBO/d, exceeding my expectations by 160 mbo/d because of the elevated completion levels through October (capital exhaustion saved!).

When I look at 2020- running November’s “drill count” and October’s “completion count”, I project 16% less wells will be drilled, 3% more wells will be completed, 2900 DUCs will be reduced from inventory (42% of the total). US production will exit the year lower than November 2019 production (completions stayed higher than I expected in October, too before dropping off 12% in November).

Completing DUCs is the best way to resolve the Crisis of Balance Sheets, so get to it.

#htotd