It’s an interesting time to work in the oil and gas business. With oil prices hovering around 40% to 50% of their 2014 levels, operators are looking to cut activity. As a company that monitors oil and gas lease production throughout the United States, Drillinginfo expected to see similar declines in leasing activity. While declines can be witnessed in some regions, other plays are holding steady and even increasing in activity. 2015 has also witnessed a significant increase in the number of lease extensions filed across the US. To analyze oil & gas leasing activity across the US we took twelve unconventional plays and compared the levels of activity over the past three years: Bakken, Barnett, Eagle Ford, Eaglebine, Fayetteville, Granite Wash, Marcellus/Utica, Mississippi Lime, Niobrara, Permian, Tuscaloosa Marine, and Woodford. Of the twelve, three saw modest to major upticks in leasing activity; three regions held steady; and the rest declined.
The six regions that witnessed declines in activity are the Barnett, Fayetteville, Mississippi Lime, Eagle Ford, Eaglebine and Tuscaloosa Marine. Of these regions, the Barnett and Eagle Ford can be considered mature plays with most of the prime acreage being held by production (HBP). The Fayetteville and Mississippi Lime have seen a contraction in acreage surrounding the sweetspots of White County and Van Buren Counties in Mississippi and North Central Oklahoma and South Central Kansas. Both the Eaglebine and Tuscaloosa Marine Shale are leased and in active drill mode with about a 10-15% decline in leasing activity from 2014 to 2015. An important note about all of the cooling counties, they all contain a significant amount of acreage that has already been leased or HBP. Just because the leasing activity has not increased within the past year doesn’t mean that there is not plenty of acreage to drill.
The Bakken, Marcellus/Utica, and Granite Wash all seem to be holding steady with 2015 leasing activity hovering within 10% of 2014 levels.
It will be interesting to watch how the various unconventional plays throughout the US respond in the future. It appears that despite the recent contraction in prices, some areas look to be able to sustain current levels even as prices hover around $40 per bbls. If prices trend upwards, the economics of many of the surrounding regions could become favorable and see renewed upticks in leasing activity. 2015 and beyond will be an interesting time for the US Exploration and Production side of the energy industry.
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