Kemp: Shale Producers Postpone Oil Well Completions

Kemp: Shale Producers Postpone Oil Well Completions
US shale producers are postponing well completions to conserve cash and defer production until prices recover, says John Kemp.

Reuters

John Kemp is a Reuters market analyst. The views expressed are his own

LONDON, Feb 20 (Reuters) - EOG Resources became the latest major shale producer to state that it would "delay a significant number of completions" when it announced fourth-quarter results.

The company plans to end 2015 with 285 wells awaiting completion services, up from 200 at the end of 2014, it told investors during an earnings call on Thursday.

Continental Resources has also announced plans to go slow on well completions in response to the slump in oil prices.

Apache and Anadarko Petroleum are among other shale producers to announce a deliberate strategy of delaying completions.

U.S. shale producers are postponing well completions to conserve cash and defer production until prices recover.

There are a large number of wells that have been drilled but are awaiting the arrival of pressure pumping crews to fracture them and service companies to link them up to gathering pipelines.


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Tom | Feb. 21, 2015
Seems like a prudent and cost effective way to keep a company afloat. Why spend money on completions when the well may not pay out. Keep the rigs under contract drilling, keep installing surface facilities and some hookups, but hold off on the big ticket costs, completions.

Luke | Feb. 20, 2015
My company worked for EOG, and we were depending on them to keep us busy through 2015, then the oil price took a dive and we were left struggling to find work. I have been looking for the last 2 months, and the only companies continuing to do work are those that already had the budget allocated and are keeping the completion crews that they have relationships with working. There are many companies who are drilling and plugging, or drilling - completing and plugging while waiting for the price to come back. Ive had one company tell me that the last 10 completions got plugged, and all of their future wells will get plugged as well, because even a $10 rise in the price of oil will greatly increase their profit and more than make up for the cost of waiting to produce that well. I just hope that the service companies can survive, because if the lack of business drives out all of the service companies, then the oil companies can expect to see sky high prices once things get busy again because there will be such high demand and very little competition.


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