I found last week’s excellent blog post by Silas on Decline in Leasing Activity not as Steep as Permits, Rigs to be very thought provoking. One thing that caught my eye that he didn’t explore was that leasing activity in Oklahoma appears to be on par with some of the other big plays. Since the lion’s share of “news” coming out of Oklahoma lately is focused on Harold “Cowboyistan” Hamm browbeating some professors, or the “Fracking Cowboy” Aubrey McClendon’s business arrangements, I thought I would take a little time and explore operator activity in Oklahoma.
Oklahoma Oil and Gas LeasingIf we focus into Oklahoma on the 30-day leasing map from Silas’s post last week we see that leasing activity generally in the state has a warm line of activity creating a backwards S shape through the Woodford Shale and then back to the west in the Granite Wash play area.
Figure 1: 30 day leasing activity heat map
It’s pretty easy to agree with his assumptions that the money for this activity is coming from well- hedged companies, companies with cash to grow their HBP portfolio, or new players.
Oklahoma Oil and Gas Permitting
I really like the heat of the above map in the neighborhood of Grady, McClain, Garvin and Stephens Counties – The SCOOP – so let’s take a closer look at permitting there. Over the past six months in those four counties, fourteen different operators have been pulling between 4 and 10 permits a week.
Figure 2: permits by operator per week in Grady, McClain, Garvin and Stephens Counties – Left early 2014; Right late 2014 and early 2015
Compared to the 12 operators in the same four counties a year ago, the permitting activity is about the same.
Let’s do the same comparison vs. Ellis, Dewey, Roger Mills, Custer and Washita Counties in the Granite Wash.
Figure 3: permits by operator per week in Ellis, Dewey, Roger Mills, Custer and Washita Counties – Left early 2014; Right late 2014 and early 2015
20 different operators pulling between 4 and 14 permits a week, vs a year previous, where we had 25 operators being a bit more active. So a visible drop in permitting activity in the Oklahoma Granite Wash.
Oklahoma Oil and Gas Rig Activity
Looking at Rig Activity within the Woodford, Mississippi Lime, and Granite Wash plays in Oklahoma, we see the fairly steep decline typical of US onshore during the recent slump.
Figure 4: Active Rigs per play in Oklahoma
If we take a look at movement within the 3 plays for the last 3 months (2-25-15—5-29-15) vs. the previous 3 months (11-25-14—2-25-15), we see the clustering remains about the same, although the activity is visibly lighter.
Figure 5: Rig Movement in the Woodford, Mississippi Lime, and Granite Wash plays, most recent three months (below), previous 3 months above
In spite of the “newsworthiness” of a few of the heads of Oklahoma-based E&Ps, Oklahoma drilling itself appears to be strong, albeit lighter in accordance with current market conditions. Oklahoma operators will certainly be well-positioned in the event of a rebound.
What do you think? Leave a comment below.
Latest posts by Eric Roach (see all)
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