The Rigs No One is Watching

While much of the market’s focus these days is centered on growth and development of the Permian Basin and Appalachia, operations in other basins are often a footnote. Today we check in on the 2018 rig count, specifically activity in our “Other Lower 48” category, the bucket that catches all activity outside of the major shale basins and the Gulf of Mexico, to understand what areas other producers are exploiting outside of the spotlight.

How many rigs are we talking about here?  One hundred eleven rigs or 12% of the total in the Lower 48 are outside of the major areas we tend to focus on.

Focusing in on that 12%, we see that only about one third, or 41 of those rigs are horizontal rigs.  We tend to focus on onshore horizontal rigs in much of our analysis, as those wells generally are more productive and thus more impactful to the macro US picture than their vertical onshore brothers.

Where are those 41 horizontal rigs?  Most are in Carthage drilling Cotton Valley or Haynesville wells or in Anadarko Texas targeting the Granite Wash, Cleveland and Marmaton formations.  

What about those seventy vertical rigs we always seem to ignore, you might ask?  Almost 50% of the vertical rigs are in the Green River Overthrust, San Joaquin Basin or the Piceance.  The rest are scattered around the rest of the country.

While the market herd tends to focus on just a few regions at a time, areas the market overlooks often provide interesting and less competitive investment opportunities.  BTU Analytics’ Upstream Outlook subscribers can look forward to assessments of the productivity and economics in some of the lesser known areas mentioned today in the near future.

Interested in hearing our latest thoughts on the most compelling opportunities in this market from our team of market experts? Be sure to reserve your seat at What Lies Ahead 2018 while there is still space available.

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Kathryn Downey Miller is President of BTU Analytics where she leads the firm’s consulting and analytics groups in delivering market advisory services to clients across all sectors of the industry. Additionally, Kathryn oversees strategic planning, financial budgeting and analyst development for the company. Prior to founding BTU Analytics, Kathryn built market expertise in a diverse set of prior industry roles, including buyside investment research at an energy focused hedge fund, energy market fundamentals consulting at Bentek Energy, investor relations strategy consulting for E&P companies and investment banking at Citigroup. She speaks frequently at industry events on North American energy markets and is a CFA charterholder.

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