Given the current oil and gas market conditions, producers across the country have been struggling to stay afloat since prices collapsed towards the end of 2014. As a result, very few operators are safe from the effects of the low price environment, and many have held on this long in the hopes of seeing price recovery in the short term. While crude has come up since, it is still a long shot from the $100/bbl times that were seen in the summer of 2014, and as the price slump continues, it raises questions as to how certain operators can continue to fare in a $40-50/bbl price environment, or even better, how they can stack up against their peers. The answer to that question can be found in the answers to the following questions:
- Which operators have the best acreage?
- Which operators can produce at the lowest cost?
- How much growth potential does each operator have?
- How accessible is the market to a given operator?
- What other commitments does an operator have?
BTU Analytics is coming out with a new report that answers those questions and gives a detailed look into the deeper fundamentals that show how producers are actually faring against the competition. By starting with well-level economics, BTU Analytics is then able to derive the information necessary to answer these questions, as well as by looking at basin differentials to WTI and Henry Hub, and compiling existing natural gas pipeline commitments.
The above map is one example of many in the report that show how BTU Analytics is able to dig further into the answer of the first question, that is, which operators have the best acreage? In this map, which contains DJ acreage drilled from 2013-2016 that was included in the data set sample, each grid represents a nine square mile section of land, while the color gradient shows what crude price (at the wellhead) is needed to see wells drilled in that acreage break even. The price bands here are telling of what we have seen from low prices; at $100/bbl crude, pretty much everything would work, but lower prices significantly reduce the amount of acreage that can break even, let alone provide any return on capital. On top of that, the circles tell where specific operator acreage lies, and from that it becomes easy to see that there is a lot more yellow and green (economic wells) in Anadarko (APC) and Noble (NBL) acreage than there is in the acreage just to the east owned by Bill Barrett Group (BBG) and Carrizo (CRZO).