Some recent findings on the Stack/Scoop/Cana plays’ productivity evolution may come as a surprise. A recent Baird Equity Research report on U.S. basin trends placed the Midcontinent plays at the bottom for their trend in productivity per average well.
The Baird team research, led by senior analyst Joseph Allman, was drawn from a dataset including 82 months of production data and more than 60,000 wells to distill total basin/play productivity per average well. The basins and plays studied were the Delaware, Midland, Stack/Scoop/Cana, Eagle Ford, Marcellus, Utica, Bakken, D-J, Powder River, Haynesville and Austin Chalk.
The analysts measured relative rank among these based on productivity consistency and “the magnitude of any productivity change over the past two years.”
Leading productivity and consistency gains were registered by the Austin Chalk, the Utica, the Marcellus and the Bakken. The analysts noted “productivity degradation” in the Stack/Scoop/Cana, however, beginning in mid- to late 2016. Since that time, productivity per average well has seemed to have dropped by 50%.
“It does not mean it is the least productive play, but it measures the trend for the play,” the Baird analysts said.
The study tracked all the new wells (having at least three full months of production) and compared their trends to the 11 other basins/plays in the study over 24 months. “It does not indicate which play is better or worse but only signals changes, both in consistency and magnitude,” according to the report.
Baird’s Basin Trend Index (BTI) would indicate, for instance, that a basin/play accorded a value of 100 would have seen its average well productivity and revenue generation increase by $100,000 per month, or $2.4 million over the two-year period. They used well data from IHS Markit and a price deck of $50/bbl and $3/Mcf to gauge average gross well revenues. There were no deductions for royalties or other working-interest partners, and they did not break out NGLs and their potential revenue uplift. Average lateral length, total well count and average gross revenues per lateral foot for newly producing wells in each period (first 12 months, first six months, first three months and first month) were included.
“Thus, operators with above-average NGLs that trade at a premium price to natural gas might have underrepresented revenues in our study,” the analysts noted.
Baird was motivated to do the study partly by its conviction that “the market has too much focus on 24-hour initial production rates—which can be manipulated easily—and 30-day peak rates, which are better, but do not offer the best representation of how a well will perform ultimately.”
The overall basin/play trend index for three full months of production were Austin Chalk, 107; Utica, 84; Marcellus, 72; Bakken, 59; Powder River, 45; Midland Basin, 30; D-J Basin, 27; Haynesville, 25; Delaware Basin, 24; Eagle Ford, 22; and Stack/Scoop/Cana, -73.