Source: RADAR | July 27, 2017

The inventory of drilled but uncompleted wells in US oil basins has continued to grow this year, while gas-dominant basins have started seeing some drawdown. As the number of rigs contracted grew over the last year, the majority of the work has been done in oil basins, with a large portion focused in West Texas and New Mexico. As a result, the vast majority of the DUCs lie in the Permian Basin.

Permian DUCs

The Permian DUC inventory has increased due not only to the drilling frenzy but also due to other parameters, most notably logistics. For example, pipelines taking oil away from the Permian Basin have continued to flow at capacity, and if you cannot send your product down the pipes, then there is not much incentive to get the well flowing.

While the DUC inventory has increased in almost every play in the Permian Basin, we have seen a major drawdown in the Bone Spring/Avalon formation since January of this year. At the start of the year, the Bone Spring/Avalon had a little over 400 DUCs in inventory; as of the beginning of July, DUCs there havefallen to 118 wells. On the opposite side of the spectrum sits all of the other formations of the Permian Basin. For example, the Wolfberry currently has 543 DUCs, which is quite a bit higher than January’s inventory of 266.

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