The Energy Information Authority (EIA) released its latest Drilling Productivity Report that showed the number of wells drilled but not completed (DUC’s) rose for the 12th successive month.
At the end of November, the total for the 7 major onshore producing areas in the lower 48 states was 7,354, up 94 on the previous month. The total is 1,900 more than December 2016. DUC’s in the Permian Basin have now doubled since the end of last year (from 1,281 to 2,613).
Wells drilled dropped for the 3rd successive month, while completions rose slightly to 1,086, up 66% on completions in December 2016.
The DUC’s will remain high for some time due to a shortage of equipment and personnel. Evidence of this came last week when Keane Group announced they had placed orders for three additional frac fleets (50,000 hydraulic horsepower each) for a total cost of $115 million. Two of the units will be delivered by the end of the second quarter of 2018 and the third by the end of the third quarter.
Keane’s capital expenditure works out to about $770 per hydraulic horsepower. That shows that capital costs are rising rapidly for pressure pumping equipment and are approaching cost levels last seen in 2014. Mammoth Energy Services disclosed in its recent 10-Q that it expects to spend $64 million in 2017 to add 132,500 horsepower of new frac pumps and equipment. That works out at $483 per hydraulic horsepower. The company also stated that, historically, frac fleets cost $1,000 per hydraulic horsepower.