Enverus Intelligence Research (EIR), a subsidiary of Enverus, an energy-dedicated SaaS platform, released on Oct. 25 a basin-by-basin look at North American drilling inventory and an analysis of how many well locations remain at various prices.
“We believe the fear around near-term shale drilling inventory exhaustion is largely overblown,” said Dane Gregoris, report author and managing director at Enverus Intelligence Research. “The limited response of U.S. crude oil and gas production to high commodity prices primarily reflects ongoing capital discipline by producers as well as availability constraints of drilling rigs, frac fleets and labor. Inventory exhaustion is not the problem in our view. We expect many non-Permian oil plays will face inventory exhaustion by the end of the decade at current activity levels.”
Key takeaways from Enverus’ North American Inventory Analysis:
- EIR estimates there are 125,000 remaining undeveloped locations, amounting to 60 billion barrels, that break even below $40 WTI across North America. The Midland and Delaware basins combined make up 85% of the sub-$40 WTI North American oil cost curve.
- North America holds 320 Tcf of undeveloped natural gas resource (pre-shrink) that breaks even below zero HH at a flat $60 WTI price, of which 82% is Permian based. An additional 815 Tcf of resource breaks even between zero and $3 HH, with 92% residing in the Montney, Haynesville, Marcellus and Utica.
- Privately funded E&Ps are running 45% of drilling rigs and 50% of completion crews in today’s U.S. growth basins, the Midland, Delaware and Haynesville. In EIR’s opinion, this cohort risks inventory exhaustion concerns over the next three to eight years; in contrast, large-cap independents, U.S. supermajors and natural gas-focused E&Ps are in far better shape and can hold activity levels for nearly 15 years without facing severe inventory deterioration.