(Petrolytics) - A few interesting items for you all this morning. The Texas April 2020 oil and gas production figures were released the other day. We're down roughly 700 kbopd (16%) in oil production and 2.6 Bcfpd (7%) in gas production when compared to the official figures from April 2019.
Although, the preliminary April 2019 numbers (i.e. volumes reported by operators and subject to update/correction) are more inline with the preliminary April 2020 numbers. We'd be surprised if the preliminary April 2020 numbers are revised significantly to the upside, but given the volatility in prices, it's no sure bet.
In any case, as oil prices continue to "surge" past $39/bbl WTI, we'll more than likely see an increase in produced volumes as operators either bring back online curtailed production, or begin completing DUCs. To what extent, is uncertain, however, there exists the strong possibility of supply "surprises" ahead.
While a common thought is supply will easily return to previous levels as price increases, we strongly believe this just isn't the case. These economically driven shut-in wells and DUCs should be cause for concern. There are many reasons these will not be put online easily and without significant well intervention spending (or even plugged and abandoned). Reservoir damage, skin, and wellbore integrity issues due to prolonged shut-in will surprise many (we've seen this happen in the field countless times, yet people are still surprised).
Enough gabbing. Food for thought this morning:
We'll be sure to keep an eye on the carbon capture bills and keep you updated. These are especially relevant to the oil and gas sector, but also incredibly important to power and renewables.
As always, stay safe.