The Surprising Location Of Next Year’s Shale Rush

  • Date: 23/12/17
  • OilPrice.com

Higher oil prices in recent months have instilled renewed confidence in U.S. shale drillers and prompted them to look for drilling opportunities in basins beyond the permanent growth story these days, the Permian.

Companies are increasing drilling and pipeline deal-making in the oil-rich rocks of Colorado, and are returning to the least explored of the major U.S. shale basins—the Denver-Julesburg Basin (DJ Basin) northeast of Denver.

Over the past four months, firms have announced more than $2 billion worth of drilling deals, and another $1.8 billion in pipeline extensions and agreements in the Basin, data compiled by Bloomberg shows.

In addition, major producers with big exposure to the DJ Basin have announced more capital investments in the area even though they haven’t increased their overall 2018 capex programs.

Colorado’s production of crude oil hit an all-time high of 397,000 bpd in September this year, the latest available monthly EIA data shows. This is up by 100,000 bpd compared to the state’s total oil production in January this year, 294,000 bpd.

Colorado’s rig count stood at 33 rigs for the week ended December 15, up by six rigs compared to the same week last year, Baker Hughes data shows.

In recent driller deals, Bill Barrett Corporation and Fifth Creek Energy Company agreed to merge earlier this month in a transaction valued at some $649 million that will create an exploration and production company exclusively focused on oil-weighted rural areas in the DJ Basin.

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