Wood Mac: US Onshore Well Count to Fall by 26% in 2015

Wood Mac: US Onshore Well Count to Fall by 26% in 2015
Oil prices under $50/barrel will results in a decline in North American well counts and rig day rates as operators scale back 2015 spending plans.

The U.S. onshore well count will decline by 26 percent, from more than 37,000 in 2014 to an estimated 27,000 in 2015, as the decline in oil prices prompted many operators to cut their 2015 spending plans, according to a recent estimate by Wood Mackenzie.

North American drilling and completion expenditures exceeded $140 billion in 2014, but Wood Mackenzie expects operators to commit less than $90 billion to upstream development over the next 12 months.

“Such sizeable cuts will have serious implications across the oilfield services sector,” said Wood Mackenzie in a statement.

Using its North America Supply Chain Analysis Tool, Wood Mackenzie forecasts that rig day rates will decline by 30 percent, while the rig count will drop from an annual average of nearly 1,800 in 2014 to under 1,300 in 2015. This decline will curtail demand in other services sector markets, including tubulars, drilling services, frac proppant and pressure pumping.

Well activity will decline more quickly in oil plays such as the Niobrara and Bakken versus plays such as the Eagle Ford and Marcellus, Scott Mitchell, supply chain analyst with Wood Mackenzie, told Rigzone. While the Marcellus gas play is still more favorable in terms of economics versus the Haynesville, economics in the Marcellus are a struggle too.

As the drilling rig market goes slack, Mitchell sees the potential for older, less efficient rigs to be retired or moved as companies favor using bigger, more efficient rigs. Wood Mackenzie views cost pressures as higher on the drilling side versus completions side. Even if drilling slows, support could continue for pressure pumping market as companies hydraulic refracture existing wells versus new wells. On the completion end, Wood Mackenzie sees a potential cost reduction of 15 percent.

Karen Boman has more than 10 years of experience covering the upstream oil and gas sector. Email Karen at kboman@rigzone.com


Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies

Our Privacy Pledge

Most Popular Articles

From the Career Center
Jobs that may interest you
Project Controls Specialist
Expertise: Project Management
Location: Minneapolis
Business Development Manager
Expertise: Business Development|Construction Manager|Sales
Location: West Sacramento, CA
Business Development Manager
Expertise: Business Development|Construction Manager|Sales
Location: Denver, CO
search for more jobs

Brent Crude Oil : $50.79/BBL 1.30%
Light Crude Oil : $49.96/BBL 1.10%
Natural Gas : $2.77/MMBtu 2.12%
Updated in last 24 hours