RigData Insights

Permian returns are producing all of the oil drilling drama

  • Tuesday, January 31, 2017
  • Posted By Meagan Wildfong

013117 The Barrel Blog | Matt Andre | January 27, 2017

 

In the last year, commodity prices have improved considerably. While oil prices were sub-$40/b in early 2016, producers were cutting back on new drilling and focusing on efficiencies — by cutting costs and concentrating drilling in the highest initial production (IP) rate counties — to get the most bang for their buck.

So when prices finally rallied in the second half of the year (bouncing off $50/b), producers were able to ramp up new drilling activity rather quickly. New drilling grew 71% across the US to 774 rigs in early January 2017 from an average of 452 rigs in June 2016.

To give more color on the price rally, WTI cash prices have risen 68% to $53/b in January this year from an average of $32/b in January 2016. Over the same time frame, Henry Hub cash prices rose 52% to $3.45/MMBtu from $2.27/MMBtu.

 

To read the article in its entirety, please visit the Barrel Blog

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