THE GHS HAYNESVILLE SHALE RIG TRACKER.
I'll update each week so we can follow the rig count. I am only counting rigs drilling the Haynesville and Bossier formations. Many industry rig numbers are for the "Haynesville Area", however they may defined that, and includes wells drilling other formations.
Scroll down for each new weekly count. I am deleting the January 26 rig count that I used to start this discussion and replacing it with a running list showing the rig count by state by week.
1/26. LA - 26, TX - 14: 40
2/1. LA - 27, TX - 14: 41
2/8. LA - 25, TX - 13: 38
2/14. LA - 25, TX - 14: 39
2/21. LA - 26, TX - 14: 40
2/28. LA - 24, TX - 14: 38
3/6. LA - 27, TX - 13: 40
3/14. LA - 24, TX - 15: 39
3/21. LA - 25, TX - 15: 40
3/27. LA - 26, TX - 11: 37
4/4. LA - 25, TX - 9: 34
4/10. LA - 26, TX - 9: 35
4/17. LA - 23, TX - 9: 32
4/24. LA - 23, TX - 10: 33
5/1. LA - 23, TX - 10: 33
5/8. LA - 22, TX - 9: 31
5/15. LA - 19, TX - 10: 29
5/22. LA - 21, TX - 10: 31
5/26. LA - 19, TX - 11: 30
5/29. LA - 20, TX - 11: 31
6/5. LA - 21, TX - 10: 31
6/12. LA - 20, TX - 10: 30
6/19. LA - 21, TX - 11: 32
6/26. LA - 21, TX - 12: 33
7/3. LA - 20, TX - 15: 35
7/10. LA - 20, TX - 15: 35
7/17: LA - 20, TX - 11: 31
7/24: LA - 21, TX - 11: 32
7/31: LA - 19, TX - 12: 31
8/7: LA - 22, TX - 12: 34
8/14: LA - 25, TX - 12: 37 * Corrected
8/21: LA - 24, TX - 12: 36
8/28: LA - 22, TX - 12: 34
9/4: LA - 23, TX - 10: 33
9/11: LA - 25, TX - 11: 36
9/18: LA - 24, TX - 12: 36
9/25: LA - 25, TX - 13: 38
Skip, do you have a feeling as to time frame per well that a rig is on location? Spud to Setting casing at the end of the lateral?
Also, are you seeing operators using spudder rigs for the surface and/or intermediate parts of the hole before bringing in the big (and more expensive) rig for lateral drilling?
No, reports of spudder rigs but I would offer a qualified yes where there are multiple wells being drilled on the same pad. SONRIS Scout Reports often show a well with some portion of the vertical drilled but with the notation, WOR (Waiting On Rig). Often that rig is drilling on the same pad. As to time frame spud to final casing string, I don't have a handle on that from my usual day to day work. The reason is that there is a wide variety in the lateral lengths being drilled across all operators so far this year. Therefore the time frame varies accordingly. Pick a specific lateral length range and I can probably scare up enough data to give a reasonably good estimate.
It seems that some companies have gone into "lease retention" mode in order to drill the fewest wells required to maintain their HBP positions or meet their MVC obligations (midstream Minimum Volume Commitments). In some cases that means only a single unit H well as opposed to a HC (Cross Unit Lateral) well or wells. If commodity prices remain low, we may see this trend lead to more re-fracs. Enough have been done successfully that it isn't so much a science experiment at this point.
Skip, thanks for those comments. No surprise to see the "how can we hold the most acreage for the least amount of drilling / cost?" dance being performed.
That is one that has been in the oilfield since Colonel Drake drilled his first well in PA.
The Haynesville Shale Fairway has held up better than most basins during the demand downturn. It is impressive that as of Friday there were 34 rigs deployed drilling either Haynesville or Mid-Bossier shale wells. Haynesville focused operators are touting their reduced D&C (drilling and completion) costs and rates of return in a number of energy media articles covering the 2nd quarter. With a rise in price and predictions of improving prices over the remainder of the year, we may see a rise in the rig count.
I had to do this count twice to make sure I had it right. The new rig count is an endorsement of operator statements that they can make an acceptable profit in the low $2 range. This is an amazing rebound in directed rigs. There are a couple of additional rigs within the Haynesville Fairway drilling other formations. So the total rigs drilling in our AOI is 43.
LOUISIANA (28, INCREASE OF 6)
Bienville: Aethon – 3.
Bossier: Comstock 1.
Caddo: Chesapeake - 2.
DeSoto: Indigo – 5, Comstock - 4, Brix – 1, Goodrich - 1.
Natchitoches: Indigo – 2.
Red River: Aethon – 2, GEP Haynesville - 1, Vine - 3, Brix - 1..
Sabine: Indigo - 3.
TEXAS (13, INCREASE OF 1)
Harrison: Rockcliff – 1, Trinity Op - 1.
Nacogdoches: Aethon - 1.
Panola: Rockcliff – 4, Sabine - 2, Tanos - 1, Comstock -1.
San Augustine – Aethon – 2.
Shelby - 0
Wow, Indigo added three rigs to my native DeSoto Parish and is running 10 rigs on the Louisiana side of the play. Call me gobsmacked. And excited!
When these new wells get completed and producing this winter from the additional rigs, the 12-month strip is much closer to $3...I don't think anyone is excited for gas in the low $2's
There is a healthy number of DUCs to be completed also. I just ran some numbers on a group of Indigo wells with 18 months reported production. The wells all paid out a couple months back by my arbitrary calculations. I used a quite conservative price per mcf of $1.90 and a 75% NRI.
$3 gas, for any extended number of months, would be great but this surge in the rig count confirms for me that most operators can turn a profit in at an average price slightly above $2. It may be a slim profit but it doesn't take much more, maybe $2.50, for them to start bragging about their rates of return being better than any other major basin.
Those 4 Indigo well....in 18 months they have produced 45.9 BCF!
Wow, that's impressive!
I agree, these guys will all have decks that show incredible IRR's and favorable basin comps once gas hits $2.50. But, only the lower leverage guys are going to be adding rigs in the 2's (In my opinion). I think all the guys with EV/EBITDA above 2 are going to wait to see a $3 strip before adding rigs, or maybe forced by their investors and creditors.
The near term price of natural gas is less significant than the hedge positions of Haynesville operators. Hedge prices are in the $2.30 to $2.60 range now for the publicly traded companies that report that metric. I can only speculate that the private companies have something similar in the way of a hedge position. This bump in rig count is related to the current rate of return. This is easily ascertained by reading the 2nd quarter corporate reports of Comstock and Goodrich. If the 3rd quarter price is as projected, those corporate reports should be quite optimistic.
I expect frack crews to be busy in the Haynesville Fairway over the last half of the year and into at least the first quarter of the next.
How long until a counted rig translates into actual production? 60-75 days?