How much drilling will we see in 2016? We came across a great article from Marcellus Drilling News highlighting this issue, and the steps that producers must take to weather the storm.
According to the article, very few analysts predict any rebound before 2017 in prices that haunted producers and lead to a 40% cut in Marcellus drilling in Pennsylvania in 2015.
Mark Marmo, president of Deep Well Services, says that they are “expecting no less than a 20% reduction from 2015, which was already 40% down from the year before.”
There are several steps that producers are taking to stay afloat, namely cutting costs where they can and focusing on smaller core areas. “We will be focusing capital on the highest rate of return areas,” says Craig Neal, vice president of operations at Consol Energy which plans to spend only 400-500 million on gas exploration and production this year, as opposed to 800 million last year and 1.3 Billion in 2014.
This means that many mineral owners outside of this core area will be neglected until it is economical for producers to return to the area. And those already receiving royalties in these core areas are certainly taking a hit as gas continues to flow at such low prices.