RE:Eagle Ford drilling productivityGood find. At first glance, the decline in barrels / day from new wells being drilled at Eagle Ford during the last few years does look terrible. I think there is a reasonable explanation.
In 2020 when Covid hit and the price of oil crashed, capital for drilling new wells was hard to come by. Larger companies with deep pockets could still afford to drill but they were only drilling their very best top tier acreage. You would expect that more premium high barrel / day wells were being drilled during this time. The junior and intermediate companies were holding on and trying not to go bankrupt. There would have been less drilling of average or marginal wells. It is not surprising to see that the overall average increased during the early post Covid time period.
I think the recent decline is because more small and mid size companies have returned to drilling Eagle Ford. They do not have the same access to top tier land, seismic and drilling rigs like the big guys working in that area have access to.
The number of drilling rigs working at Eagle Ford today is very similar to the 2017 to 2020 period. Wells were averaging 1500 barrels / day back then which is the same as what they are averaging now. The 2016 to 2017 period was another anomaly because of a price crash. The graph shows a similar spike in the barrels / day data for new wells. This also happened at the exact same time that the number of rigs dropped significantly. When the price of oil heads south, budgets are reserved for drilling only top tier prospects.
Ranger is sitting on almost 1000 new locations. At an average rate of drilling one new well per week, that inventory will allow them to have multiple rigs going full time for the next 20 years. If top tier wells can continue to average 1500 barrels / day for the next few years, I think Baytex with Ranger's new assets will do better than just OK. Baytex at Peavine has proven that this company knows how to drill wells better than the competition. Eagle Ford oil trades at a premium to WTI and these wells have a lower decline rate compared to Baytex's Peavine Clearwater wells. There are so many positives to this deal.
I think the WCS differential blowing up last year really opened up the new CEO's eyes. This new acquisition will help remove any future WCS risk from Baytex. They will be able to deploy capital to either side of the border, wherever it is most profitable to drill. This was a very wise move.
Now the CEO is heading out on a road show next week to start promoting Baytex to a huge U.S. audience that is starting to realize the importance of energy security. I am very happy that they found someone to lead the new company and not someone that was going to sit on his hands for a few years thinking about things.
Hopefully Eric Nuttall can explain things better tomorrow morning at 9:35 ET on BNN.