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Unconventional Oil & Gas Leasing Activity Update


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 Hot

Three regions have seen an increase in activity over the past three years: Niobrara, Woodford, and Permian Basin. While the Woodford appears to be holding steady at 2014 levels, the Niobrara Shale has seen an increase in activity over the past year. Activity appears to be consolidating in and around Weld County with the rest of the counties dropping off in importance. The Permian Basin is by far the most popular place to be leasing in the country. Activity is reaching far across the entire region ranging east from San Angelo, Texas all the way west to Carlsbad, New Mexico and north from Lubbock, Texas south to the Mexican border.
LT - Fig 1 Oil & Gas Leasing
The Cold
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.
LT - Fig 2-2 Oil & Gas Leasing
The Consistent
The Bakken, Marcellus/Utica, and Granite Wash all seem to be holding steady with 2015 leasing activity hovering within 10% of 2014 levels.
LT - Fig 3-1 Oil & Gas Leasing
The Future
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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Len Tesoro

Len Tesoro is Director of Land Products at Drillinginfo. He is responsible for organizing and maintaining a network of lease collection that spans most producing counties in 14 states. He also put together a group of over 20 GIS professionals to map and maintain our leasing data. Before joining Drillinginfo in 2000, Len worked as a Petroleum Landman throughout Texas and Louisiana. He received his Bachelor of Arts from the University of Texas at Austin and his Master of Business Administration from Thunderbird School of Global Management.