The North American play-level inventory rankings are in, and there’s been some shakeups.
After almost a year since the last publication by Enverus Intelligence Research (EIR), the remaining inventory by play has seen some movement on the leaderboards. While EIR made minimal revisions to the quantity of remaining locations, quality fell across the board. Cost inflation, productivity degradation, improved data and other development trends drove most of the inventory quality reductions, but those variables did not change uniformly across North American plays.
- Tier 1 and 2 (PV-10 breakeven [BE] < $50/bbl or $2.50/mcf) inventory dropped 30% since last year, but some plays are more resilient than others.
- Winners include the Montney, Eagle Ford, DJ and SCOOP/STACK plays, which all moved up in the rankings.
- Losers include the Marcellus and Bakken, which both slid down in the rankings.
- Permian plays still hold the most remaining Tier 1 and 2 locations, but the Montney has a longer lifespan of Tier 1 and 2 sticks due to less activity in the play.
Winners:
Montney
Even with an increasing pace of development, the Montney has de-throned the Delaware for the top spot on sub-$50/bbl BE (Tier 1 and 2) inventory life. The Canadian play is no exception to the trends in degradation and inflation, but the quality of some Montney inventory got help from an improved Canadian Liquids Correction model in Enverus PRISM®. The liquids-rich regions of the play now rank among the top North American plays, with sub-$45/bbl (or $2.25/mcf) breakevens according to EIR. Many of EIR’s top gas equity picksoperate in these regions and have over a decade of sub-$3 HH inventory. With ~1/3 the number of wells put on production each year as the Permian plays, the Montney has a long runway if activity levels hold.
Eagle Ford
The Eagle Ford play (inclusive of Austin Chalk) moved up an astounding six spots on the inventory life leaderboard. Although rig day rates were up 18% year-over-year in September, operators continue to find material efficiency gains to offset inflation. EIR also expanded the extents of proven resource in the Austin Chalk and Upper Eagle Ford, adding some locations with surprisingly strong economics. But the story here is largely resiliency. The core still holds years of inventory, and those locations still break even in the low-$40/bbl range with some of the tightest spacing in North America.
Losers:
Marcellus
Cost inflation between 2022 and 2023 was among the highest in North America. Rig day rates were up 25% year-over-year in September, compared to ~15% across the L48. Total well costs per lateral foot are up ~20% since early 2022 according to estimates in PRISM. Some operators have managed to minimize per foot productivity degradation by widening spacing, but at the cost of some inventory. Productivity degradation is worst in the NE PA Core according to EIR, meaning the area with the highest potential for Tier 1 locations must be risked down.
Bakken
The bulk of the remaining inventory in the Bakken is no longer in EIR’s Tier 1 or 2 categories. Cost inflation has not been as kind to the Bakken as other Rockies plays according to estimates in PRISM. The DJ Basin moved up in both inventory rankings thanks to efficiency gains offsetting inflation and minimal productivity degradation. Then compound the shift in non-core development strategies to wider spacing, longer laterals and less Three Forks, plus a significant increase in the pace of development. All that adds up to a shorter Tier 1 and 2 runway and a drop in the leaderboard behind rival Rockies play, the DJ.
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*About Enverus Intelligence®| Research
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. EIR is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser. See additional disclosures here.
