The quantity of drilled-but-uncompleted wells has reached an all-time high. That means a lot of opportunity for completions companies.
Everyone knows that oil and gas is cyclical. But what we’re just starting to see is that the latest downturn has had lasting effects on the way operators approach drilling and production. The days of wildcatting and speculative investment are over—replaced by innovative, insightful, and data-driven approaches to extracting the world’s energy reserves.
When OPEC opened the taps in the fall of 2014, their goal was to crush the threat of a nascent shale boom in the United States. In theory, flooding the world with supply would force shale and offshore operators to curtail their efforts in order to remain fiscally viable.
Offshore production took the hint. But shale operators took a different approach: Rather than cut production, they got creative and worked to lower their cost per barrel.
In hindsight, it’s not surprising. With better and more accurate understanding of local geologies, and innovative methods for both drilling and extraction, players in the Permian, Bakken, and other oil-rich regions of the country were able to reduce costs to maintain ROI. And because of that, the United States is now a bigger player in the world’s energy economy than it has been for decades.
An interesting byproduct has been the number of drilled-but-uncompleted wells, also known as DUCs. These wells are where the greatest opportunities lie for completions companies in coming years.
Growing demand and changing markets
Despite recent years of overwhelming supply, demand has continued to grow. In 2017 alone, global energy demand grew 2.1 percent—more than twice the average annual rate seen over the last decade.1
Though a glut in supply remains, demand will eventually catch up. And rather than producing oil and gas now and storing it, operators have been drilling the wells but leaving the resources in the ground. When commodity prices fully recover and the economics make more sense, completions crews can get to work quickly to produce the wells.
OPEC and Russia agreed to cut production by 1.2 million barrels per day in December 2018, but thus far the market has been unimpressed. More cuts will be needed to stabilize the markets and prevent prices from falling further.
That hasn’t stopped operators in the United States from drilling wells. In fact, the innovations and optimizations necessitated by the downturn have been so significant that wells are being drilled faster than they can be completed.
According to the Journal of Petroleum Technology (JPT), the U.S. inventory of DUCs is greater than 8,200. The Permian Basin leads the way with more than 3,600 wells waiting to be completed.2
With all this potential—and without any centralized governing body regulating output—the United States is poised to gain even more market share in the energy markets. And that will mean a lot of work for the completions companies who can capitalize on the opportunity.
Differentiating your business with value
Today, completions companies in the Permian and throughout the United States have more jobs than they know what to do with. There’s no shortage of work.
But is your company making the most of the opportunity?
Everyone from mom-and-pop service companies operating a single truck to mid-size and bigger players is looking to capture as much of the market as they can. And they should. But focusing only on the jobs available now is short-sighted. It’s the companies with smart, forward-looking strategies that will still be around for the next boom-and-bust cycles.
Completions companies that invent, advance, and promote new technologies that will improve efficiency and increase ROI will not only succeed now, but succeed in the long term. Businesses don’t grow just by providing a service. Anyone can do that. Businesses grow by providing value.
What makes your business different? Maybe it’s your process. Or you have the most experience. Or the best expertise, the latest technology, or an original approach.
Whatever it is, that’s what’s going to make the difference between your business and someone else’s.
You’ve got to make sure your audience knows about it.
Marketing is part of any smart strategy
The energy industry has always been a bit skeptical of marketing. So much of that business is built on relationships, and the solutions and services are often so complex that the value you offer doesn’t fit neatly on a single page in a trade publication.
But a smart strategy with a holistic approach will generate awareness for your brand, demonstrate your worth to target audiences, and help you build your business for long-term success. To move the needle and really establish your business will take more than just a new website, video, or brochure. It’ll take all of the above, as well as outside-the-box thinking that shows your audiences that your business—better than any other—can provide the solutions and services that deliver value.
When you do that you transcend marketing. You create a movement.