Denver — Drilling activity in the SCOOP/STACK - a play once considered to be the next Permian Basin - slowed this week to a pace not seen in nearly three years.
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Rig count across the neighboring central Oklahoma shale basins dipped by another four, falling to just 57, data published Thursday by Enverus/DrillingInfo showed.
The recent slowdown in drilling there has accompanied weaker oil prices this year, which in recent months have averaged around $55-$57/b at the benchmark WTI. Those prices are down from late 2018 highs at nearly $75/b, S&P Global Platts data shows.
In 2019 alone, the number of active drilling platforms in the SCOOP/STACK has declined by nearly 44%, falling from a January high of 105 rigs. The pace of drilling in central Oklahoma had already reached its zenith in the second quarter 2018 when the rig count there briefly hit 116.
This year, though, higher well costs, varying rock quality and increasingly unpredictable, often disappointing, rates of return have seen major acreage holders, such as Chesapeake, Cimarex, Devon, Marathon and others, move in droves to pause their drilling activity - particularly in the STACK of Kingfisher County.
In September, half-cycle internal rates of return in the STACK were estimated at 17% and in the SCOOP at less than 11%, data from S&P Global Platts Well Economic Analyzer shows.
Of particular concern for many operators is the rock formations. Although many pilot wells drilled in central Oklahoma at first appeared similar to those found in the Permian Basin, upon deeper exploration, those formations have been weighted more heavily toward gas.
In the STACK, gas comprises about 42% of the production mix. In the SCOOP, gas accounts for about 47% of the recoverable resources, Platts Analytics data shows.
US RIG COUNT
The downshift in SCOOP/STACK drilling activity was accompanied by a broader pullback from the US oil and gas industry, which saw the total nationwide rig count fall by nine to a 29-month low at 945.
As has typically been the case in recent weeks, oil-directed drilling accounted for most of this week's decline, with oil rigs falling by a net seven and gas rigs dropping by three.
Along with the SCOOP/STACK, the Eagle Ford also witnessed a notable slowdown this week with rig count there also declining by four to 75 rigs. Drilling activity there is now hovering just above a 30-month low of 73 rigs seen in early September.
Among the other major oil basins, rig counts in the Bakken of North Dakota and the Denver-Julesburg of Colorado were both down by two this week, falling to 56 and 22 rigs, respectively.
Rig count in the Permian Basin continued to build for a second consecutive week, with the addition of just a single drilling platform to 416.
In the US' dry gas plays, rig counts continued to hover at or near recent multiyear lows.
In the Marcellus, rig count fell by one this week to 46. In the neighboring Utica Shale, the rig count was unchanged at 15. In the Haynesville of Louisiana and East Texas, the rig count climbed by two this week to 55 rigs or its highest since late July.
-- J. Robinson, firstname.lastname@example.org
-- Edited by Gary Gentile, email@example.com