U.S. DUC shale backlog declines, except in Permian basin

By Stephen Cunningham on 7/16/2019

WASHINGTON D.C. (Bloomberg) --The backlog of DUCs in major U.S. shale plays fell for a fourth straight month, the longest stretch of declines since 2016, as producers came under intense pressure from shareholders to rein in costs while boosting output.

The number of drilled but uncompleted wells, or DUCs, fell by 41 to 8,248 in June, according to the Energy Information Administration’s Drilling Productivity Report. That’s down from a record high of 8,315 in February. Demands for fiscal discipline are spurring more producers to finish existing wells.

“They have already sunk their cash into the drilling portion,” said Elisabeth Murphy, an analyst at ESAI Energy. “Now it’s just a matter of completing rather than drilling new wells.”

While the number of DUCs fell in most regions, the Permian saw an increase of 42. The West Texas basin has experienced pipeline bottlenecks that are expected to ease as soon as next month as new conduits start opening.

Production from the top seven shale regions is expected to increase by 49,000 bpd in August to 8.55 MMbpd, according to the EIA. Gains will be led by the Permian, where output is seen rising by 34,000 bpd.

Although production continues to scale new heights, the pace of increases is slowing. July’s forecast output was revised lower in this report.

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