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Producer High-Grading Paid Dividends In 2015

Published Mon, 01 Aug 2016 19:35:19 -0400 on Seeking Alpha

As the commodity crash began in 2014, we pointed out that producers would likely high-grade acreage ("High-Grading" - Every Producer's Best Friend in 2015) to sustain production at lower drilling levels and attempt to focus on the rock and technology (High Grading Better Rock or Better Completions?) that would yield the most oil and natural gas. We also analyzed where producers would need to focus activity (The Limits of High Grading) in certain plays in order to achieve the best outcomes from drilling activity in 2015, and that not every producer would be equally positioned in its ability to improve the quality of the wells it drilled in 2015. Now that nearly a year has gone by and state production data is nearly complete for much of the country for the year 2015, we thought it was time to review if producer high-grading was successful.

Reviewing the data indicates that nearly every major play saw some improvements in productivity in 2015 measured via initial production rates, but the rate of improvement varied drastically as some areas are quite mature in their development (Bakken and Eagle Ford). The Central Midland area in the Permian Basin has been a clear winner in growth in initial production rates with 677 horizontal wells reporting an average IP rate 27% higher than the 648 wells that were reported in 2014. The second biggest improvement came from the Powder River Basin (NYSEARCA: PRB) where results from Devon (NYSE: DVN), EOG Resources (NYSE: EOG),... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
CHESAPEAKE ENERGY 1.79   3.1 0.58 0.00 19.13
BLACKROCK GLOBAL OPP EQUITY TRUST 10.44   0.0 0.00 0.00 7.28
ENCANA 4.68   4.0 1.16 0.08 1.60
DEVON ENERGY 24.56   3.0 8.07 0.36 1.47
EOG RESOURCES 79.68   13.0 6.15 1.15 1.44


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