The road to recovery has been a long one for many oilfield service companies and suppliers. Just about everyone in the industry has spent the last four years hoping for and wondering when higher crude prices would return. With oil prices continuing to stay above $60 a barrel, the recovery appears to be here to stay.
The landscape of exploration and production has changed from the heydays of 2014-2015. Three and four years ago, when drilling and production were discussed, the Bakken was usually the first play talked about. The Bakken is still solid in terms of drilling activity and production, but there is a new, old play driving the recovery – the Permian Basin of west Texas and southeast New Mexico.
According to the latest drilling productivity report published by the US Energy Information Agency (EIA), the Permian Basin produced 3,076,066 barrels of oil in March. In March of 2015, oil production was 1,885,709. In just three years, the Permian has increased output by 61 percent.
Looking at the Bakken over the same period, March 2018 production was 1,211,467 barrels, and March 2015 was 1,224,046. Production in the Bakken was a 1.03 percent decrease, but this shows the shift in activity to the Permian Basin.
Talk to most people in the industry now, and they are going to talk about the Permian. The Permian Basin has been a good producer for years and has a firm grip as the top producing play.
Drilling Rig Activity
The latest rig activity report from the EIA shows the number of active rigs in the Permian is almost 40 percent of the entire active drilling fleet. Looking closer at five key production areas, there is an increase in active rigs across each one (see chart 1).
The Bakken is regaining steam with a year-to-year increase in active rigs of over 28 percent. Wyoming also shows an increase, with 11 more active rigs in April 2018, versus April 2017.
The Haynesville shale of northwest Louisiana and the Anadarko Basin of Oklahoma do not have dramatic increases in active rigs but are steady, consistent areas that are significant contributors to total US production of both oil and natural gas. Both of these areas should be watched carefully as there is potential for much higher output.
Active Operators and Drilling Contractors
Throughout the top plays, there are operators that continue to lead in production and new well starts. Some of these operators include Chevron USA, COG Operating, Continental Resources, EOG Resources, Pioneer Natural Resources, and XTO Energy.
The drilling contractors that are most active in the primary plays are Helmerich & Payne, Nabors Drilling, Patterson UTI, and Unit Drilling.
Sourcing Work in the Oilfields
With drilling and production activity on the rebound, there is work to be done in the oilfields. A staff member of TCI Business Capital recently had a conversation with a foreman from a large oil producer. This foreman had some great advice on what to do and how to get your company work. The main points he brought up were reputation, not over-promising then under delivering, and a willingness to show you can do the job. Keeping this advice in mind can go a long way towards getting your company hired on the next job.
About the Author: TCI Business Capital
Since 1994, TCI Business Capital has provided consistent cash flow to oilfield service companies through invoice factoring programs. Stop waiting for customer payment and get same day cash through our customized factoring programs. To learn more about how factoring can help your oilfield service company, contact us via our website, tcicapital.com, or by calling 800-707-4845.