Decade of efficiency gains deliver the most commercial wells in US shale’s history

Lateral length is still increasing, nationwide average surpasses 10,000’

The industry continues to switch to longer laterals in nearly all major US oil & gas basins, and no inflection point has been reached so far even though it has been a decade since that start of this fundamental trend. Shorter 1-mile lateral completions have become nearly non-existent by now, with only 13% of all horizontal completions from 2020-1Q21 exhibiting perforated lengths of under 6,000’. However, the industry is more frequently testing ultra-long laterals, of 2.5-3 miles, in recent quarters. We saw the market share of 11,000’+ laterals increasing from less than 1% in 2014-2015 to around 8% in 2018-2019, which has subsequently surged to a staggering 19% in 2020-1Q21. Lateral wells of 3 miles are also now being tested and adapted successfully even in basins which historically lag the country’s average perforated length – such as Delaware New Mexico. In that basin, we are now tracking second-month production data for two of the new 3-mile laterals by Devon, each recovering 190,000-200,000 barrels of oil in the first two production months.

Bearing this in mind, preliminary 1Q21 data suggests that both the average and P50 perforated lateral length is surpassing 10,000’ for the first time in the nation’s history. The interquartile range has really narrowed in recent quarters as 1-mile laterals have lost market share quickly. The same observation is true for the Permian Basin, where the P50 lateral length has gradually crawled up, from 9,400-9,600’ in the first half of 2019 to 10,200’ in the first quarter of this year. It should be noted that Midland P50 laterals are now trending toward 11,000’, while 50% of Delaware completions also demonstrate laterals in excess of 10,000’.