Permian explorers drill deep into fraclog, leaving shelves bare

(Bloomberg) — Shale explorers in the Permian Basin chewed further into their supply of ready-made wells for a 20th straight month, leaving the smallest inventory of low-cost wells in the biggest U.S. oil field in more than half a decade.

The number of wells that have been drilled and await a frac crew to complete them, also known as DUCs, stood at 1,309 last month, according to the U.S. Energy Information Administration’s drilling productivity report. The lowest number of DUCs in West Texas and southeast New Mexico since February 2017 could eventually lead to a lag on new oil output hitting the market as producers must now call on more drilling rig crews to start the new-well process. 

Two years after the worst crude crash in history, producers are focused on completing existing wells to increase output, cutting further into the so-called fraclog. Now publicly traded explorers are hesitant to boost spending on drilling so that they can instead grow dividends and buy back shares even with oil trading over $100 a barrel.

The agency revised its estimates for oil production volumes from the Permian Basin to be lower than it thought last month.