April US shale oil output expected to grow 131,000 b/d to 6.9 mil b/d: EIA

Houston (Platts)--12 Mar 2018 623 pm EDT/2223 GMT

US oil production from unconventional sources is likely to rise 131,000 b/d to 6.954 million b/d in April amid continued brisk drilling activity and crude prices that have apparently stabilized above $60/b, the US Energy Information Administration said Monday.

The 131,000 b/d projection is up 19% from the 110,000 b/d shale oil production growth estimated last month for March, the agency said in its monthly Drilling Productivity Report.

"Rig productivity went up in every basin, and rig counts went up," EIA Senior Analyst Jozef Lieskovsky said in explaining the agency's April forecast. "Everyone is making good money at this oil price."

According to the Baker Hughes rig count, which draws its raw figures from S&P Global Platts RigData, 34 oil rigs were added to the US fleet in February.

Article continues below...

Request a free trial of: North American Crude and Products ScanNorth American Crude and Products Scan
North American Crude and Products Scan

Delivered daily the North American Crude and Products Scan provides the information you need to keep up to date on news, pricing, and analysis affecting the North American crude and refining markets.

Request a free trialMore Information

As usual, the Permian Basin is poised to jump by the highest amount of all the seven unconventional oil basins tracked in the DPR. In April, production from the West Texas/New Mexico basin could jump by 80,000 b/d to 3.156 million b/d, the DPR said. That is roughly in line with the 75,000 b/d targeted last month by EIA for March.

Other large domestic oil-weighted basins also are forecasted to grow next month, by a bit more volume than was estimated for March.

For example, the DPR predicts oil output from the Eagle Ford Shale in South Texas will grow by 23,000 b/d to 1.330 million b/d, compared to 18,000 b/d in the prior forecast.

Also, oil production in both the Bakken Shale, sited in North Dakota/Montana, and the Niobrara Shale in Colorado, could each swell by 12,000 b/d in April, to 1.223 million b/d and 595,000 b/d, respectively, the report estimated.

That contrasts with EIA's prior growth predictions of 7,000 b/d for the Bakken and 6,000 b/d for the Niobrara in March, the agency said.

Meanwhile, the Anadarko Basin in Oklahoma, which spans multiple smaller plays, chief among them the SCOOP and STACK, is forecasted to grow by just 1,000 b/d in April to 493,000 b/d -- the same amount of growth predicted last month for March.

According to the March S&P Global Platts Well Economics Analyzer, the Permian Midland currently has the lowest oil breakeven prices, of $32.06/b. That compared to $46.89/b in March 2016.

Second-lowest this month is the Permian Delaware, at $34.10/b, down from $36.73/b in March 2016.

In addition, the Bakken's March 2018 breakeven price is $34.14/b, while the Eagle Ford's is $34.87/b. That compares to $37.12/b and $36.80/b, respectively, in March 2016.

In addition, the domestic drilled but uncompleted well inventory, popularly known as DUCs, continued to grow in February, the DPR said. Last month, 110 DUCs were added to the US inventory for a total of 7,601. By contrast, 107 DUCs were added in January.

DUCs fell in the Bakken and the Niobrara last month, but increased in the Permian and the other large oil-weighted plays, DPR data showed.

DUCs are wells that upstream operators drill but leave unfinished, either deliberately -- to wait for a higher oil price, for example -- or because they typically complete wells in batches and have not yet been able to finish the job for various reasons, such as a lack of completion crews.

Crew shortages have been an issue in recent months, although oilfield service companies say they are hiring and training as many as possible.

"The companies tell us every crew available is working," Lieskovsky said.

--Starr Spencer,

--Edited by Kevin Saville,

Copyright © 2018 S&P Global Platts, a division of S&P Global. All rights reserved.