Relevant to ATS' strategy...
If the largest U.S. frackers kept their production roughly flat, as they have in recent years, many could continue drilling profitable wells for 10-20 years, but if they raised output 30%/year - the pre-COVID growth rate in the Permian Basin - they would run out of prime drilling locations in just a few years,WSJreports.
Five of the largest shale drillers - EOG Resources(NYSE:EOG), Devon Energy(NYSE:DVN), Diamondback Energy(NASDAQ:FANG), Continental Resources(NYSE:CLR)and Marathon Oil(NYSE:MRO)- all have about a decade or more of profitable well sites at their current drilling pace, but would exhaust that inventory within about six years if they raised production 15%/year, according to the analysis.
EOG, one of the few companies now trying to find new places to frack for oil and gas in the U.S., has 12.5 years left of inventory if it keeps output roughly flat, but only 4.4 years if it raised output by 15%/year, theWSJassessment says.
Devon has 9.2 years left at its current drilling pace, which would shrink to 2.2 years at 15% annual growth,WSJsays.
Some companies, including EOG, disputed the notion that they are running low on prime wells; EOG said it is "highly confident" in its inventory of future drilling locations, but CEO Ezra Yacob also toldWSJhe thinks peers eventually will need to invest in risky exploratory drilling, because the top-tier drilling locations "are going pretty fast."
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