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No one can accuse SynMax of understating the importance of producer efficiency gains. Gains in 2023 have been exceptional, averaging 10% to 20% for producers on a year-over-year basis. Longer lateral lines from new wells, the shift to 3-mile lateral wells from 2-mile lateral wells, wider well spacing, faster drilling times, increased simulfracing, the advent of trimulfracing (completing 3 wells at the same time), more frac pumping hours per day, and reduced down-times from fracking and drilling have all added to efficiency improvements for producers. The efficiency gains have allowed producers to cut back on capital expenditures while simultaneously increasing production, a rare occurrence indeed and could put the Lower 48 US on a new paradigm trajectory shift upwards in production. This is especially the case with new demand coming from LNG liquefaction projects slated to come online in 2024 and beyond.
The efficiency gains in 2023 are set to continue into 2024 with further incremental efficiency gains in production according to a few producers who already are giving insights and sneak peeks into next year.
One other favorable factor for producers in 2024 is the expected deflation in drilling and completion costs, a favorable surprise compared to the inflation of the past few years. Producers in the Lower 48 US expect drilling and completion costs to be lower in 2024 by 5% to 15% compared to 2023.
Devon Energy
One such producer is Devon Energy who is already expecting double-digit percentage efficiency gains into 2024 in the Delaware portion of the Permian basin according to their latest 3rd quarter 2023 earnings presentation.
Devon Energy plans on allocating more of their capital to the New Mexico side of the Delaware portion in the Permian basin where they have been achieving relatively high outperformance from the wells.
Callon Petroleum
Another Permian producer expecting efficiency gains to continue into 2024 is Callon Petroleum. Callon expects production to benefit from faster cycle times and from significantly lower drilling and completions in 2024 compared to 2023. They expect to drill and complete 50,000 more lateral feet and 5 more wells in 2024 compared to 2023 with the same amount of capital expenditures as 2023. The company expects to see higher record long laterals and more record low completion times in 2024.
Hyperion Haynesville Frac Crew Update
Frac crew data is brought to you by Hyperion. After the recent surge in Haynesville Texas frac crews, there has now been an even larger surge in Haynesville Louisiana frac crews.
Frac crews in Haynesville Louisiana have surged very quickly since late October to near the highs of 2023. This will likely lead to higher production in Haynesville. Stay tuned for more updates on the Hyperion channel.
