Analysts: Oil Industry is on a Bumpy Road to Recovery
While it seems the natural gas and oil industry is convinced that the worst is over and markets are on their way to a comeback, the only certainty is that the road to recovery is going to be a long, bumpy one.
“The main reason natural gas producers, in particular, think the market has hit a bottom is that all the reduction in rig activity is finally catching up to the market,” said NGI’s Patrick Rau, director of strategy and research.
High-grading, drilling longer laterals and reducing the drilled but uncompleted (DUC) inventory will only go so far. Eventually, the impact from the severe decline in drilling will become evident, especially when so many of the rigs that have been laid down are horizontal, Rau said.
“Horizontal wells tend to have hyperbolic decline, meaning so much production occurs in the first few years of the well. If you don't keep drilling those, the industry misses out on that initial surge of production, which is starting to be reflected in production numbers,” he said.The whole article can be read by clicking here.
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