RigData Insights

Permit Growth not Clear Indicator for Drilling Activity

  • Wednesday, September 28, 2016
  • Posted By Meagan Wildfong

92816Source: Platts RigData RADAR Report | September 22, 2016 

 

Alongside an uptick in the US active land rig count has been a gain in permitting activity, according to Platts RigData RADAR Report. Does that bode well for future increases in drilling activity? Not necessarily, when one looks at the shrinking duration gap between the two metrics.

 

During 2014–2016, the peak in active rigs followed the peak in permits by 22 weeks; the trough for rigs following same for permits arrived in only 8 weeks. This likely represents two things:  1) the proliferation of pad drilling during the boom phase of the cycle, wherein fewer rigs are drilling more wells per capita and 2) the high-grading of locations in unconventional plays during the bust phase, which kept rig counts more closely in line with the number of permits that preceded it. The rigs drilling these plays may be capable of drilling 8–12 wells per pad, but operator budget constraints and laser-like focus on individual well returns have resulted in fewer rigs relative to the number of permits approved.

 

Call 1-800-371-0083 for the full report or to subscribe to Platts RigData RADAR Report, the leading statistical monitor of overall land rig market activity and drilling trends by region, play, operator, driller, and many other proprietary metrics.

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