global oil surplus at 8.6 million bpd, despite 6.3 million bpd OPEC cuts; wells drilled and wells completed lowest on record

May’s surplus oil output was at 8.6 million barrels per day, despite OPEC cuts of 6.3 million bpd; US wells drilled and wells completed were lowest on record; the DUC backlog was 16.5 months; US offshore rigs were at a record low; while US oil supplies & oil+products supplies were record highs.

oil prices rose for the 7th week out of the past eight this week, on signs of rising demand and on the apparent success of the OPEC+ output cuts…after falling more than 8% to $36.26 a barrel last week on fears of a second wave of the coronavirus, the contract price of US light sweet crude for July delivery opened lower and slid to as low as $34.48 a barrel early Monday, as new coronavirus infections hit China and the US, stoking fears of weak fuel demand, but rebounded from those early losses after the UAE energy minister voiced confidence that OPEC+ countries would meet their commitments and reported signs that oil demand was picking up, and ended Monday 86 cents higher at $37.12 a barrel…oil prices then followed a stock market rally higher on Tuesday, rising $1.26, or 3.4% to settle at $38.38 a barrel, after the International Energy Agency increased its oil demand forecast for 2020, citing higher than expected consumption during the lockdowns…but oil prices gave up some of those gains in post-settlement trade Tuesday evening after the American Petroleum Institute reported U.S. crude inventories rose by more than was expected, and thus opened lower & fell to $37.21 a barrel early Wednesday but finished off the day’s lows at $37.96 a barrel after the EIA reported that domestic product supplies had declined and oil traders weighed the data in the monthly OPEC report…oil prices rose more than 2% on Thursday on the output cut compliance indicated by that OPEC report to settle 88 cents higher at $38.84 per barrel after major producers at a meeting of the Joint Ministerial Monitoring Committee (JMMC), which monitors compliance with OPEC output quotas, moved to ensure that certain countries made up for failing to fully meet their reduction targets last month….oil prices pushed higher in early trade on Friday after OPEC producers and their allies reaffirmed their supply cut commitments and two major oil traders said demand was recovering well and went on to finish 91 cents higher at a ten week high of $39.75 a barrel, a gain of nearly 10% for the week, as Iraq and Kazakhstan submitted “compensations schedules” to the JMMC to make up for falling short of their pledges to reduce output

natural gas prices. on the other hand, ended lower for the 3rd straight week, as lower gas output and warmer weather forecasts weren’t enough to offset the impact of falling exports…after falling 2.9% to a two-week low of $1.731 per mmBTU last week on milder weather that reduced demand for air conditioning, the contract price of natural gas for July delivery tumbled 6.2 cents to a one month low $1.669 per mmBTU on Monday, on forecasts for lower demand over the next two weeks than was previously expected, despite a report of slowing production…prices then fell another 5.5 cents to a two month low on Tuesday, as already depressed LNG exports were reported still lower, while natural gas production was reported higher….but prices recovered 2.4 cents of their losses on Wednesday, on a forecast for warmer weather and greater demand in the coming week…natural gas prices held steady at $1.638 per mmBTU on Thursday, as a continued drop in LNG exports offset the forecast for an increase in demand next week and then rose 3.1 cents to finish the week at $1.669 per mmBTU, as forecasts for warmer weather and higher air conditioning demand over the next two weeks intensified… 

the natural gas storage report from the EIA for the week ending June 12th indicated that the quantity of natural gas held in underground storage in the US rose by 85 billion cubic feet to 2,892 billion cubic feet by the end of the week, which left our gas supplies 722 billion cubic feet, or 33.3% higher than the 2,170 billion cubic feet that were in storage on June 12th of last year, and 419 billion cubic feet, or 16.9% above the five-year average of 2,473 billion cubic feet of natural gas that has been in storage as of the 12th of June in recent years….the 85 billion cubic feet that were added to US natural gas storage this week was above the consensus forecast from S&P Global Platts’ survey of analysts calling for a 79 billion cubic feet increase, but it was a bit less than the average of 87 billion cubic feet of natural gas that have been added to natural gas storage during the same week over the past 5 years, and it was well below the 117 billion cubic feet addition of natural gas to storage during the corresponding week of 2019… 

The Latest US Oil Supply and Disposition Data from the EIA

US oil data from the US Energy Information Administration for the week ending June 12th indicated that even with a big drop in our oil production and a modest decrease our oil imports, we still had surplus oil to add to our stored commercial supplies of crude oil for the 3rd time in six weeks, and for the 29th time in the past forty weeks….our imports of crude oil fell by an average of 222,000 barrels per day to an average of 6,642,000 barrels per day, after rising by an average of 685,000 barrels per day during the prior week, while our exports of crude oil rose by an average of 23,000 barrels per day to an average of 2,462,000 barrels per day during the week, which meant that our effective trade in oil worked out to a net import average of 4,180,000 barrels of per day during the week ending June 12th, 245,000 fewer barrels per day than the net of our imports minus our exports during the prior week…over the same period, the production of crude oil from US wells fell by 600,000 barrels per day to 10,500,000 barrels per day, and hence our daily supply of oil from the net of our trade in oil and from well production totaled an average of 14,680,000 barrels per day during this reporting week..

meanwhile, US oil refineries reported they were processing 13,600,000 barrels of crude per day during the week ending June 12th, 116,000 more barrels per day than the amount of oil they used during the prior week, while over the same period the EIA’s surveys indicated that a net of 421,000 barrels of oil per day were being added to the supplies of oil stored in the US….so based on that reported & estimated data, this week’s crude oil figures from the EIA appear to indicate that our total working supply of oil from net imports and from oilfield production was 659,000 barrels per day more than what was added to storage plus what our oil refineries reported they used during the week….to account for that disparity between the apparent supply of oil and the apparent disposition of it, the EIA just plugged a (-659,000) barrel per day figure onto line 13 of the weekly U.S. Petroleum Balance Sheet to make the reported data for the average daily supply of oil and the average daily consumption of it balance out, essentially a fudge factor that they label in their footnotes as “unaccounted for crude oil”, thus suggesting an error or errors of that magnitude in the oil supply & demand figures we have just transcribed…however, since the media usually treats these weekly EIA figures as gospel and since these figures often drive oil pricing and hence decisions to drill for oil, we’ll continue to report them as is, just as they’re watched & believed as accurate by most everyone in the industry…(for more on how this weekly oil data is gathered, and the possible reasons for that “unaccounted for” oil, see this EIA explainer)….   

further details from the weekly Petroleum Status Report (pdf) indicate that the 4 week average of our oil imports rose to an average of 6,721,000 barrels per day last week, which was still 10.0% less than the 7,467,000 barrel per day average that we were importing over the same four-week period last year….the 421,000 barrel per day net addition to our total crude inventories included 247,000 barrels per day that were added to our Strategic Petroleum Reserve, and 174,000 barrels per day that were being added to our commercially available stocks of crude oil ….this week’s crude oil production was reported to be down by 600,000 barrels per day to 10,500,000 barrels per day because the rounded estimate of the output from wells in the lower 48 states was down by 600,000 barrels per day to 10,100,000 barrels per day, while a 1,000 barrel per day increase in Alaska’s oil production to 361,000 barrels per day had no impact on the rounded national total….last year’s US crude oil production for the week ending June 14th was rounded to 12,200,000 barrels per day, so this reporting week’s rounded oil production figure was about 13.9% below that of a year ago, yet still 24.6% more than the interim low of 8,428,000 barrels per day that US oil production fell to during the last week of June of 2016…    

meanwhile, US oil refineries were operating at 73.8% of their capacity while using 13,600,000 barrels of crude per day during the week ending June 12th, up from 73.1% of capacity during the prior week, but still among the lowest refinery utilization rates of the last thirty years…hence, the 13,600,000 barrels per day of oil that were refined this week were still 21.2% fewer barrels than the 17,264,000 barrels of crude that were being processed daily during the week ending June 14th, 2019, when US refineries were operating at 93.9% of capacity….

with the increase in the amount of oil being refined, gasoline output from our refineries was also higher, increasing by 217,000 barrels per day to 8,356,000 barrels per day during the week ending June 12th, after our refineries’ gasoline output had increased by 360,000 barrels per day over the prior week… however, since our gasoline production is still recovering from a multi-year low, this week’s gasoline output was still 19.8% lower than the 10,423,000 barrels of gasoline that were being produced daily over the same week of last year….on the other hand, our refineries’ production of distillate fuels (diesel fuel and heat oil) decreased by 264,000 barrels per day to 4,498,000 barrels per day, after our distillates output had increased by 48,000 barrels per day over the prior week…after this week’s decrease in distillates output, our distillates’ production was 16.6% less than the 5,371,000 barrels of distillates per day that were being produced during the week ending June 14th, 2019….

even with the increase in our gasoline production, our supply of gasoline in storage at the end of the week decreased for the 5th time in 8 weeks and for the 13th time in 20 weeks, falling by 1,666,000 barrels to 256,995,000 barrels during the week ending June 12th, after our gasoline supplies had increased by 866,000 barrels over the prior week…our gasoline supplies decreased this week because our imports of gasoline fell by 99,000 barrels per day to 530,000 barrels per day, and because our exports of gasoline rose by 187,000 barrels per day to 495,000 barrels per day, while the amount of gasoline supplied to US markets decreased by 30,000 barrels per day to 7,870,000 barrels per day….but even with this week’s inventory decrease, our gasoline supplies were still 10.2% higher than last June 14th’s gasoline inventories of 233,221,000 barrels, and roughly 10% above the five year average of our gasoline supplies for this time of the year…  

with the decrease in our distillates production, our supplies of distillate fuels decreased for the twelfth time in 22 weeks and for the 22nd time in 37 weeks, falling by 1,358,000 barrels to 174,471,000 barrels during the week ending June 12th, after our distillates supplies had increased by 1,568,000 barrels over the prior week….our distillates supplies fell this week because the amount of distillates supplied to US markets, an indicator of our domestic demand, rose by 253,000 barrels per day to 3,555,000 barrels per day, while our imports of distillates fell by 14,000 barrels per day to 163,000 barrels per day and our exports of distillates fell by 112,000 barrels per day to 1,301,000 barrels per day,…even after this week’s inventory decrease, our distillate supplies at the end of the week were still 36.5% above the 127,821,000 barrels of distillates that we had stored on June 14th, 2019, and about 28% above the five year average of distillates stocks for this time of the year…

finally, even with the drop in our crude oil output and the decrease in our oil imports, our commercial supplies of crude oil in storage rose for the 18th time in twenty-one weeks and for the 33rd time in the past 52 weeks, increasing by 1,215,000 barrels, from a record high of 538,065,000 barrels on June 5th to another all time high of 539,280,000 barrels on June 12th…that meant our our commercial crude oil inventories were around 15% above the five-year average of crude oil supplies for this time of year, and 53% above the prior 5 year (2010 – 2014) average of our crude oil stocks for the second week of June, with the disparity between those comparisons arising because it wasn’t until early 2015 that our oil inventories first topped 400 million barrels….since our crude oil inventories have generally been rising over the past year and a half, except for during last summer, after generally falling until then through most of the prior year and a half, our crude oil supplies as of June 12th were 11.8% above the 482,364,000 barrels of oil we had in commercial storage on June 14th of 2019, 26.4% above the 426,527,000 barrels of oil that we had in storage on June 15th of 2018, and 5.9% above the 509,095,000 barrels of oil we had in commercial storage on June 16th of 2017…  

furthermore, once again checking the total of our commercial oil supplies and the stockpiles of all the refined product made from oil, we find those supplies have increased by 7,085,000 barrels this week to another record high of 1,446,723,000 barrels, 10.3% more than the 1,311,841,000 barrel total of the same week a year ago…  

OPEC’s Monthly Oil Market Report

Wednesday of this past week saw the release of OPEC’s June Oil Market Report, which covers OPEC & global oil data for May, and hence it gives us a picture of the global oil supply & demand situation during the first month of the two month agreement between OEC, the Russians, and other oil producers to cut production by 9.7 million barrels a day from an elevated October 2018 baseline….before we start, ​i have to caution that estimating oil demand while most countries on the planet are restarting their economies after a month or two of lockdown is pretty ​speculative, and hence the demand figures we’ll be reporting this month should be considered as having a much larger margin of error than we’d normally expect from this report..

the first table from this monthly report that we’ll review is from the page numbered 44 of this month’s report (pdf page 54), and it shows oil production in thousands of barrels per day for each of the current OPEC members over the recent years, quarters and months, as the column headings indicate…for all their official production measurements, OPEC uses an average of estimates from six “secondary sources”, namely the International Energy Agency (IEA), the oil-pricing agencies Platts and Argus, ‎the U.S. Energy Information Administration (EIA), the oil consultancy Cambridge Energy Research Associates (CERA) and the industry newsletter Petroleum Intelligence Weekly, as a means of impartially adjudicating whether their output quotas and production cuts are being met, to thus avert any potential disputes that could arise if each member reported their own figures… 

May 2020 OPEC crude output via secondary sources

as we can see from the above table of oil production data, OPEC’s oil output ​was cut by 6,300,000 barrels per day to 24,195,000 barrels per day during May, from their revised April production total of 30,495,000 barrels per day…however that April output figure was originally reported as 30,412,000 barrels per day, which means that OPEC’s April production was revised 83,000 barrels per day higher with this report, and hence May’s production was, in effect, a 6,213,000 barrel per day decrease from the previously reported OPEC production figures (for your reference, here is the table of the official April OPEC output figures as reported a month ago, before this month’s revisions)…

from the above table, we can also see that production decreases of 3,160,000 barrels per day from the Saudis, 1,364,000 barrels per day from the Emirates, 921,000 barrels per day from Kuwait, and 340,000 barrels per day from Iraq accounted for the lion’s share of the May decrease, even as every other OPEC producer except for Iran, whose production is exempt from the agreement, also made appropriate production cuts…to facilitate understanding how each of the OPEC members have been adhering to their production cut agreement, we’ll next include a table which shows the October 2018 reference production for each of the OPEC members (as well as other producers party to the mid-April agreement), as well as the production level each of those producers was expected to cut their output to….

April 13th 2020 OPEC   emergency cuts

the above table was taken from an article at Zero Hedge, and it shows the oil production baseline in thousands of barrel per day off of which each of the oil producers will cut from in the first column, a number which is based on each of the producer’s October 2018 output, ie., a date before the past year’s and past quarter’s output cuts took effect; the second column shows how much each participant will cut in thousands of barrel per day, which is 23% of the October 2018 baseline for all participants except for Mexico, while the last column shows the production level each participant has agreed to after that 23% cut…​sanctioned OPEC members Iran ​and Venezuela and war-torn Libya are exempt from these cuts…

with a net 6,300,000 barrels per day decrease in their production, it appears that OPEC has exceeded the 6,084,000 barrels per day they had committed to cut…however, the baseline for the May thru July cuts is OPEC’s production of October 2018, and the 6,300,000 barrels per day drop in their production represents the output change since April, so we can’t really compare the two…moreover, production of some of the OPEC members is still well above their target level…for instance, Iraq had committed to cut their production by 1,061,000 barrels per day and only produce 3,592,000 barrels per day in May, but they only cut their production by 340,000 barrels per day in May, and thus produced 4,165,000 barrels per day, 572,000 barrels per day more than they were supposed to…

the next graphic from this month’s report that we’ll include shows us both OPEC and world oil production monthly on the same graph, over the period from June 2018 to May 2020, and it comes from page 45 (pdf page 55) of the June OPEC Monthly Oil Market Report….on this graph, the cerulean blue bars represent monthly OPEC oil production in millions of barrels per day as shown on the left scale, while the purple graph represents global oil production in millions of barrels per day, with the metrics for global output shown on the right scale….

May 2020 OPEC report global oil supply

including the 6,300,000 barrel per day ​cut in OPEC’s production from what they produced a month earlier, OPEC’s preliminary estimate indicates that total global oil production decreased by a rounded 10.04 million barrels per day to average 89.89 million barrels per day in May, a reported decrease which apparently came after May ‘s total global output figure was revised lower by 470,000 barrels per day from the 99.46 million barrels per day of global oil output that was reported a month ago, as non-OPEC oil production fell by a rounded 3,740,000 barrels per day in May after that revision, with lower oil production from Russia, the US, Kazakhstan, Oman, Canada, Azerbaijan, Norway and Mexico the major reasons for the non-OPEC output decrease in May…with the big decrease in May’s global output, the 89.89 million barrels of oil per day produced globally in May were 8.2 million barrels per day, or 8.4% less than the revised 98.09 million barrels of oil per day that were being produced globally in May a year ago, the 5th month of OPECs first round of production cuts (see the June 2019 OPEC report (online pdf) for the originally reported May 2019 details)…with this month’s big drop in OPEC’s output, their May oil production of 24,195,000 barrels per day fell to 26.9% of what was produced globally during the month, down from the 30.5% share OPEC contributed in April, and the 28.7% global share they had in March…OPEC’s May 2019 production, which included 529,000 barrels per day from former member Ecuador, was reported at 29,876,000 barrels per day, which means that the 13 OPEC members who were part of OPEC last year produced 5,152,000, or 17.6% fewer barrels per day of oil in May than what they produced a year ago, when they accounted for 30.4% of global output…

Even with the big drop in OPEC​’s​ and global ​oil ​output that we’ve seen in this report, there was still a big surplus in the amount of oil being produced globally during the month, as this next table from the OPEC report will show us…    

May 2020 OPEC report global oil demand

the above table came from page 25 of the June OPEC Monthly Oil Market Report (pdf page 35), and it shows regional and total oil demand estimates in millions of barrels per day for 2019 in the first column, and OPEC’s estimate of oil demand by region and globally quarterly over 2020 over the rest of the table…on the “Total world” line in the third column, we’ve circled in blue the figure that’s relevant for May, which is their estimate of global oil demand during the second quarter of 2020…

OPEC is estimating that during the 2nd quarter of this year, all oil consuming regions of the globe will be using an average of 81.30 million barrels of oil per day, unrevised from their estimate for the 2nd quarter a month ago, largely reflecting coronavirus related demand destruction….meanwhile, as OPEC showed us in the oil supply section of this report and the summary supply graph above, OPEC and the rest of the world’s oil producers were still producing 89.89 million barrels per day during May, which would imply that there was a surplus of around 8,590,000 barrels per day in global oil production in May, still 10.6% greater than the demand estimated for the month… 

in addition to ​noting ​the May surplus, the downward revision of 470,000 barrels per day to April’s global output that’s implied in this report, means that the record 18,160,000 barrels per day of global oil surplus we had ​previously ​figured for April would now be revised to a surplus of 17,690,000 barrels per day…since we had also figured a 18,068,000 barrels per day surplus in March, and since March supply & demand were unrevised in this report, that means the record oil surplus now occurred in March rather than in April…although OPEC reports that their demand figure for the first quarter is unchanged from the last report, we note that the table shows that it fell from 92.40 million barrels per day to 92.39 million barrels per day, which we’ve lightly circled in green…al​though that ​is essentially just a rounding error, the 92.40 million barrels per day​ figure​ is the number we used to figure January’s and February’s surplus…hence we should also revise our February surplus oil production estimate from 2,190,000 barrels per day to 2,180,000 barrels per day, and revise our January surplus oil production estimate from 1,220,000 barrels per day to 1,210,000 barrels per day…

This Week’s Rig Count

the US rig count fell for the 15th week in a row during the week ending June 19th, and is now down by 66.5% over that fifteen week period….Baker Hughes reported that the total count of rotary rigs running in the US decreased by 13 rigs to 266 rigs this past week, which was the fewest active rigs in Baker Hughes records going back to 1940 and 138 fewer rigs than the all time low prior to this year, and was also down by 701 rigs from the 967 rigs that were in use as of the June 21st report of 2019, and 1,663 fewer rigs than the shale era high of 1,929 drilling rigs that were deployed on November 21st of 2014, the week before OPEC began to flood the global oil market in their first attempt to put US shale out of business….

the number of rigs drilling for oil decreased by 10 rigs to 189 oil rigs this week, after falling by 7 oil rigs the prior week, leaving oil rig activity at its lowest since June 12, 2009, which was also 600 fewer oil rigs than were running a year ago, and less than an eighth of the recent high of 1609 rigs that were drilling for oil on October 10th, 2014….at the same time, the number of drilling rigs targeting natural gas bearing formations fell by 3 to 75 natural gas rigs, which was the least natural gas rigs running in at least 80 years, and down by 102 natural gas rigs from the 177 natural gas rigs that were drilling a year ago, and less than a twentieth of modern era high of 1,606 rigs targeting natural gas that were deployed on September 7th, 2008…in addition to those rigs drilling for oil & gas, two rigs classified as ‘miscellaneous’ continued to drill this week; one on the big island of Hawaii, and one in Lake County, California… a year ago, there was ​just ​one such “miscellaneous” rig deployed, drilling a test well in Sandusky county Ohio..

the Gulf of Mexico rig count was down by 2 to 11 rigs this week, with all of those rigs drilling for oil in Louisiana’s offshore waters…that was the fewest number of rigs working in the Gulf or offshore nationally in Baker Hughes offshore records dating back to 1968, and 13 fewer rigs than the 24 rigs drilling in the Gulf a year ago, when 22 rigs were drilling offshore from Louisiana and two rigs were operating in Texas waters…there are no rigs operating off other US shores at this time, nor were there a year ago, so the Gulf of Mexico rig count is equal to the national rig count, just as it has been since the onset of last winter…

the count of active horizontal drilling rigs decreased by 12 rigs to 234 horizontal rigs this week, which was the fewest horizontal rigs active since January 20th, 2006, and hence is a new 14 year low for horizontal drilling…it was also 612 fewer horizontal rigs than the 846 horizontal rigs that were in use in the US on June 21st of last year, and less than a fifth of the record of 1372 horizontal rigs that were deployed on November 21st of 2014…at the same time, the directional rig count decreased by 4 to 18 directional rigs this week, and those were also down by 50 from the 68 directional rigs that were operating during the same week of last year…on the other hand, the vertical rig count rose by 3 rigs to 14 vertical rigs this week, but those were still down by 39 from the 53 vertical rigs that were in use on June 21st of 2019….

the details on this week’s changes in drilling activity by state and by major shale basin are shown in our screenshot below of that part of the rig count summary pdf from Baker Hughes that gives us those changes…the first table below shows weekly and year over year rig count changes for the major oil & gas producing states, and the table below that shows the weekly and year over year rig count changes for the major US geological oil and gas basins…in both tables, the first column shows the active rig count as of June 19th, the second column shows the change in the number of working rigs between last week’s count (June 12th) and this week’s (June 19th) count, the third column shows last week’s June 12th active rig count, the 4th column shows the change between the number of rigs running on Friday and the number running before the same weekend of a year ago, and the 5th column shows the number of rigs that were drilling at the end of that reporting week a year ago, which in this week’s case was the 21st of June, 2019…    

June 19 2020 rig count summary

the net of the basin totals shown above is a decrease of 11 rigs, and since we had 1​2​ horizontal rigs removed nationally this week, ​an additional horizontal rig would have had to have been shut down in ​an​other basin not tracked separately by Baker Hughes and hence not shown above….checking the rig counts in the Texas part of Permian basin, we find that 3 rigs were pulled out of Texas Oil District 8, or the core Permian Delaware, while two rigs were added in Texas Oil District 7C, or the southern Permian Midland, and one rig was added in Texas Oil District 8A, or the northern Permian Midland​ ​at the same time…with the total rig count in the Texas Permian thus unchanged, that means that all five rigs that were shut down in New Mexico would have been drilling in the western Permian Delaware to account for the 5 rig decrease in the Permain basin rig count nationally…elsewhere in Texas, rigs were pulled out of Texas Oil District 2 and Texas Oil District 4, which would account for the 2 rigs removed from the Eagle Ford shale, which stretches in a relatively narrow band through the southeastern part of the state and touches on both of those Oil Districts…in addition, a rig was also removed from Texas Oil District 6, which accounts for the rig pulled from the Haynesville shale, since the Haynesville rig count in northern Louisiana remained unchanged at 21​…mean​while​,​ Louisiana’s count was down by 2 because of the removal of the two rigs that had been drilling in the state’s offshore waters….elsewhere, the rig pulled out of North Dakota was the Williston basin rig, and the rig pulled out of Oklahoma was the last Arkoma Woodford natural gas rig….that Arkoma Woodford​ ​rig, the rig pulled out of the Texas Haynesville, and the removal of a natural gas rig from West Virginia’s Marcellus account for the decrease of three natural gas rigs this week, and ​that leaves nothing else on the board unexplained…

DUC well report for May

Monday of this past week saw the release of the EIA’s Drilling Productivity Report for June, which includes the EIA’s May data for drilled but uncompleted oil and gas wells in the 7 most productive shale regions….for the fourteenth time in fifteen months, this report showed a decrease in uncompleted wells nationally in M​a​y, as both the drilling of new wells and completions of drilled wells decreased, but drilling decreased by more…..for the 7 sedimentary regions covered by this report, the total count of DUC wells decreased by 33 wells, falling from a revised 7,624 DUC wells in April to 7,591 DUC wells in May, which ​was also 12.6% fewer DUCs than the 8,681 wells that had been drilled but remained uncompleted as of the end of May of a year ago…this month’s DUC ​decrease occurred as 428 wells were drilled in the 7 regions that this report covers (representing 87% of all U.S. onshore drilling operations) during May, down by 287 from the 715 wells that were drilled in April and the lowest number of wells drilled in the history of this report, while 461 wells were completed and brought into production by fracking, a decrease of 262 well completions from the 723 completions seen in April, and down by 65% from the 1,317 completions seen in May of last year, and also the lowest number of completions ​in one month ​since completions have been reported by the EIA….at the May completion rate, the 7,591 drilled but uncompleted wells left at the end of the month represents a 16.5 month backlog of wells that have been drilled but are not yet fracked, up from the 10.8 month DUC well backlog of a month ago, with a recognition that this normally indicative backlog figure is being skewed by record low completions…

both oil producing regions and natural gas producing regions saw a net DUC well decrease​s​ in May, even as some basins still showed small increases…the number of uncompleted wells remaining in Oklahoma’s Anadarko basin decreased by 15 in May, falling from 677 at the end of April to 662 DUC wells at the end of May, as 14 wells were drilled into the Anadarko basin during May while 29 Anadarko wells were being fracked….there was also a decrease of 13 DUC wells in the Eagle Ford of south Texas, from 1,362 DUC wells at the end of April to 1,349 DUCs at the end of May, as 55 wells were drilled in the Eagle Ford during May, while 68 already drilled Eagle Ford wells were completed…in addition, the drilled but uncompleted well count in the Niobrara chalk of the Rockies’ front range decreased by 5 to 478, as 35 Niobrara wells were drilled in May while 40 Niobrara wells were completed…on the other hand, DUCs in the Permian basin of west Texas and New Mexico increased by 6, from 3,462 DUC wells at the end of April to 3,468 DUCs at the end of May, as 201 new wells were drilled into the Permian, while 195 wells in the region were being fracked….at the same time, DUC wells in the Bakken of North Dakota increased by 3, from 861 DUC wells at the end of April to 864 DUCs at the end of May, as 33 wells were drilled into the Bakken in May, while 30 of the drilled wells in that basin were being fracked…

among the natural gas producing regions, the drilled but uncompleted well count in the Appalachian region, which includes the Utica shale, fell by 10 wells, from 532 DUCs at the end of April to 513 DUCs at the end of May, as 61 wells were drilled into the Marcellus and Utica shales during the month, while 71 of the already drilled wells in the region were fracked….on the other hand, the natural gas producing Haynesville shale of the northern Louisiana-Texas border region saw their uncompleted well inventory increase by 1 to 257, as 29 wells were drilled into the Haynesville during May, while 28 of the already drilled Haynesville wells were fracked during the same period….thus, for the month of May, DUCs in the five major oil-producing basins tracked by in this report (ie., the Anadarko, Bakken, Niobrara, Permian, and Eagle Ford) decreased by a net of 24 wells to 6,821 wells, while the uncompleted well count in the natural gas basins (the Marcellus, Utica, and the Haynesville) decreased by 9 wells to 770 wells, although as this report notes, once into production, more than half the wells drilled nationally will produce both oil and gas…

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