Is 2024 the Best Year Yet for US Shale Productivity?

Dear Subscriber,

We're excited to share with you one of our URTeC 2024 presentations, "Enhancing Production Efficiency: The Impact of Precision Targeting in the Midland Basin", where we analyzed over 18,000 wells to uncover how specific landing zones impact three-year cumulative oil volumes. Read it here >>.In this week's newsletter, we also share:

• A new podcast episode, where Ted Cross sat down with Geoff Jay and Bill Austin to explore the latest factors in unconventional well performance and how AI is changing the game. You can listen to the episode here >>.

• One of our URTeC papers, "Enhancing Production Efficiency: The Impact of Precision Targeting in the Midland Basin", that reveals that secondary bench wells can experience up to 40% production loss when development is delayed. You can download it here >>.

• A must-read article by our VP of Product Management, Ted Cross: "2024: Best US Shale Productivity Ever?"

• A clip from our last webinar; "Uinta Unveiled: Can Permian-esque Results Justify SM's Purchase Price" where we explore the geological factors that contribute to better production and why SM's acquisition is positioned right in the sweet spot.

• We also have a new job opening for a Inside Account Executive to join our Austin team. More info here >>.

Enjoy the read!

2024: Best US Shale Productivity Ever?

2024 unconventional wells are on track to be the best cohort drilled ever, a major reason US oil production has been holding up surprisingly well in this year. Longer laterals, high-grading, and well designs all are playing a role. Let's dig in.

First, let's look at the numbers. Here, we are plotting 3-month cumulative oil production (green line) for each quarter-by-quarter cohort of wells since 2017. Operators have increased per-well productivity for four straight quarters, up 16% since the 2023 Q1 low. 2024 Q1 wells were an average 275 barrels better than the previous record set in 2020 Q4. (That is a rounding error over 90 days, but still, impressive!!)

Looking at lateral lengths, 2024 Q1 is the first quarter ever where operators have, on average, drilled oil wells longer than 10,000', adding nearly 600' on average over the past year. However, if you normalize production by lateral length, productivity has still improved, marking a significant trend change.

Operators have brough online fewer wells each quarter since 2023 Q2 as prices have driven activity lower. During slowing activity, operators usually high-grade to focus on the better locations. Consistent with this, the fraction of Permian wells has increased from 59% at the start of 2023 to 63% today, though we see similar per-well production improvements across the Permian AND most basins, especially the Denver-Julesburg, Williston, and Anadarko.

Additionally, emerging plays have proven very productive: in 2023, the average Appalachian Utica well was 7% better than than the average Permian well, and the average Uinta was 14% better (!!). This comes at the same time as strong performance within the Permian from emerging zones like the Jo Mill, Dean, and Barnett.

Finally, average inter-well spacing has crept up from 599' in 2021 to 696' in 2024. While some of the 2024 wells have yet to see their closest neighbors drilled, the overall trend to slightly-wider spacing is consistent with a move to high-graded inventory: if you can turn a super tight development that has Tier 2-equivalent performance to Tier 1 while widely spaced, you'll do that when prices are low.

Unconventionals have simply refused to collapse like many bears have anticipated. Operators continue to innovate in terms of well design, new play development, and spacing. These effects of innovation and high-grading act as a balancing weight during periods of declining activity, especially during consolidation as large operators prioritize the long-term.

[PDF] Enhancing Production Efficiency: The Impact of Precision Targeting in the Midland Basin

In this URTeC 2024 presentation, we explore how precision targeting can improve well productivity. Dive into the data-driven insights from our study, where machine learning reveals the impact of landing zone on well performance.

If you want to learn more, you can download the paper here.

[Podcast] Daniel Energy Partners Podcast – In Basin Observations

Last week, Ted Cross was a guest at the DEP podcast, “In Basin Observations”, where he explored with Geoff Jay and Bill Austin the factors driving unconventional well performance in 2024. From AI innovations to emerging plays, this episode is packed with insights.

[Webinar] Uinta Unveiled: Can Permian-esque Results Justify SM's Purchase Price

Discover how overpressure in the Uinta Basin is paving the way for Permian-level results.

In this clip, we explore the geological factors that contribute to better production and why SM's acquisition is positioned right in the sweet spot.

[Paper] Forecasting Production Loss for Delayed Secondary Bench Development in the Midland Basin

Curious about how delaying secondary bench development impacts well productivity?

One of our URTeC papers of this year, reveals that secondary bench wells can experience up to 40% production loss when development is delayed.

Learn how machine learning models are helping operators optimize pad economics and make informed decisions. You can download the paper here.

[Job Opening] Inside Account Executive

We are looking for a motivated Inside Account Executive to join our Austin team. If you have a proven track record in SaaS sales and want to make an impact in the energy sector, we want to hear from you!

Apply today and help us transform energy investments with AI-driven insights here.

Ready to see what’s under the hood and how Novi Labs can help you get valuable insights?

Book your personalized demo with our team: https://novilabs.com/request-for-demo/