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Horizontal Drilling and the Rockies: Are Uinta This?

While our coverage in the Energy Market Commentary generally covers big developments or news in the energy industry, every so often we like to take a step back and focus on regions that get less attention from the market. Today, we’ll take a closer look at activity in Utah’s Uinta Basin.  What does the future hold for the Uinta?  Let’s review recent trends to see.

The map below shows the seven counties that BTU Analytics uses to define the Uinta Basin and the wells that have been drilled in those counties since 2015. Vertical activity has been focused in Duchesne, Uintah, and Carbon counties, and recent horizontal activity has been in Duchesne and Uintah counties.

Basin activity fell off hard in 2015 following the oil price crash.  As activity has recovered, a shift in development activity from vertical drilling to horizontal drilling has occurred.  Since early 2016, horizontal drilling activity has been increasing and even surpassed vertical drilling in recent months.

Horizontal drilling in the Uinta has been primarily driven by two companies: Crescent Point Energy and Newfield Exploration.

Crescent Point Energy, a Canadian company with assets in the Williston and Southwest Saskatchewan in addition to the Uinta, has been operating in the basin for several years.  The company indicated in a May investor presentation that they plan to drill more than 30 horizontal wells in 2018 and are testing stacked pay results in the Castle Peak, Uteland Butte, and Wasatch formations.  However, the company announced several management changes including CEO and COO in May and June and a new acquisition in the East Shale Duvernay in April, leaving some uncertainty about the company’s future priorities.

Newfield Exploration has been explicit about the company’s near-term focus on the Anadarko Basin.  The company has allocated approximately 10% their capex budget to the Uinta in 2018, with a focus on HBP drilling and preserving the option of more aggressive future development.  Newfield Exploration also operates in the SCOOP/STACK, Williston Basin, and Arkoma Basin.

With some recent well results in the Uinta posting 1,000+ Boe/d IP rates, there appears to be potential in the basin.  However, even the basin’s most active horizontal producers aren’t currently prioritizing its development within their own portfolios.  What does the future hold for the Uinta?  How does it fit into the bigger picture of the Rockies?  Which smaller plays continue to carve out a niche in a future dominated by a few large basins?  Request a sample of our Upstream Outlook service for BTU Analytics’ thoughts and the future US upstream landscape.

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