Oilfield activity levels have changed rapidly in response to falling commodity prices this spring. Enverus’ near real-time activity analytics, however, show a stark difference in how completion and drilling activity is responding. This has important implications for operators, oilfield service providers and forecasters.
Figure 1 displays the average monthly Lower 48 horizontal rig count and the average monthly L48 active hydraulic fracture pad count, indexed to January 2018. Additionally, we plotted the ratio of rigs to active fracture pads. The chart shows several interesting trends.
- Active fracture pads and rigs display a loosely coupled relationship. Rigs and fracture pads exhibit similar macro behaviors over the last 2.5 years. Completion activity tends to be more seasonal, however, falling off later in the year as budgets are exhausted and rising in 1Q as those budgets are reset.
- The ratio line helps illustrate shifts in rig and fracture activity parity. At current efficiency levels, parity between rigs and fracture activity occurs at a range of 3-3.5 rigs for every fracture crew (see Band of Parity). As we move above that range, we begin to build drilled uncompleted (DUC) well inventory, and as we move below it, we work through the DUC inventory. The significant increase in the ratio this year from March to May indicates that we moved into a much accelerated pace of building DUC inventory.
- Fracture activity bottomed in May, while rigs are still seeking the bottom. The ratio has transitioned into DUC burn territory as completion activity has bounced back, and we expect completions to continue to outpace drilling for the remainder of the year.
FIGURE 1 | Rig and Fracture Activity
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