Marathon has elected to suspend their Resource Play Exploration (REx) drilling and leasing activity due to the oil price collapse. This includes the presently drilling Crowell well in Rapides Parish. Not a shocking development, but the economics just don't merit capital when capital is so limited in this environment.
Thanks, Jay. Sorry to hear it. The members will have questions. The well had a permitted TVD of 15,324 and was reported to be drilling at 14,483' on 4/6. Would you think that the rig will stop in the vertical section of the wellbore or finish drilling the curve? What precautions are taken to keep the wellbore stable, if any, while shut in? Is the wellbore likely to be stable for an extended period without intermediate casing?
I will know more after my scout report this afternoon. If they elect to T & A the well they will put a plug up into the deepest pipe point to allow for a re entry at a future date.
They are temporarily plugging the well right now. Will take them several days to do this. When/if they come back only time will tell.
Jay, thanks for posting this. Sorry to say but similar "shut downs" of various degrees will be happening all over the oil patch
Thanks for posting guys, it was fun while it lasted. HC
I am very surprised a company as large as Marathon would suspend drilling a well in progress, especially one that is so far along. This sure does seem a drastic measure! Any comment on that you guys? They must think this will be a long crash. The crash after 1986 lasted about 17 years!
Since they already have some info from other wells, continuing to spend $$$ on this well to only get the lateral drilled doesn't make a lot of sense since they wouldn't be doing more capital intensive things like setting casing or frac'ing the well.
Hole can always be re-entered and drilled out to TD by MRO or another company in the future.
Does anyone know if the big 3D survey out in this area (CGG?) has begun acquiring data on the ground? If not, that survey may get shut down too if the underwriters pull their funding
Last I saw in my area of Camp Claiborne was several weeks ago and that was the fixed wing plane flyovers for several days which could have been part of 3D survey because it is in the NW corner section.
Thanks for that info on the airborne work. I am thinking that the ground work (which is 95+% of the 3D effort) make be on the chopping block too after MRO's decision.
Time will tell.
A big investment for sure. Time will tell for sure.
Excerpt, Houston Chronicle.
Energy companies swiftly slashed spending and dividends after oil prices on Monday suffered their biggest one-day decline in 30 years.
Two Houston firms, Occidental Petroleum and Marathon Oil, each cut nearly a third of their planned capital spending, cutting about $1.7 billion and $500 million respectively from the Houston companies’ budgets used to fund oil exploration and production. West Texas producers Diamondback Energy and Parsley Energy also plan to idle oil rigs and lay off fracking crews.
“We're taking swift and decisive action to defend our cash flow generation, protect our balance sheet and fund our dividend,” Marathon Oil CEO Lee Tillman said in a statement.
The cuts capped Monday’s historic oil crash, which saw the price of the U.S. benchmark plunge 25 percent, or more than $10 a barrel, to settle at $31.13 per barrel. It was the biggest one-day decline since the first Gulf War in January 1991. Monday’s price collapse came as Russia and Saudi Arabia said they would flood the market with cheap crude despite weakening demand caused by fears of the novel coronavirus.
Oil rallied Tuesday, rebounding more than 10 percent to settle at $34.36. However, it wasn’t enough to quell fears of sweeping spending cuts and mass layoffs that seem all but certain. Many shale companies can turn a profit at $50 a barrel oil, but they cannot survive $30 a barrel oil without drastic cuts to production and staff, analysts said.
Marathon on Tuesday said it will immediately reduce its capital spending plan to $1.9 billion from $2.4 billion.
The oil and gas producer also said it plans to suspend all drilling operations in Oklahoma and reduce drilling activity in the Northern Delaware basin in New Mexico. The company has three oil rigs and one fracking crew in Oklahoma, and four oil rigs and one fracking crew in the Northern Delaware Basin.
Most of the projections I have seen call for sub $50 crude until at least 2022 and this was before the entire shutdown of the worlds activity today. This play will not recover for years.