The number of completions declined sharply in December as E&P companies responded to the abrupt decline in the price of oil in late 2018. This is according to the latest Drilling Productivity Report from The Energy Information Authority (EIA).
Completions were 1,211, down 88 on the restated figure from the prior month. This is also down 96 on the original reported number. Completions were down in all regions except Appalachia.
The number of Wells drilled but not completed (DUCs) continue to rise, though revisions to prior months muddy the waters. At the end of December, the total number of DUCs for the 7 major onshore producing areas in the lower 48 states was 8,594. This is actually 129 down on the number reported last month but up 218 on the restated number. The average monthly increase for the last nine months has been 187.
Note that, every month, the EIA restate prior months’ figures, with revisions going back four years.
The reduced completions has led the EIA to reduce the projected increase in oil production. Last month they projected production of 8,166,000 bpd for January. Now they are projecting 8,116,000 bpd. February is forecast to increase by only 63,000 bpd on January.
I wonder if the EIA is being a little too pessimistic in the short-term. Both Halliburton and Schlumberger have announced Q4 results in recent days and both stated that they expected completion activity to be up slightly in Q1 from Q4 as E&P customers suffered from budget exhaustion in late 2018.
However, in the long-run, unless oil prices rise substantially, the onshore shale plays will struggle to match the torrid grow seen in 2017 and 2018.