American Oil and Gas Reporter - September 2020 - 54

pages 51-60_Layout 1 9/22/2020 4:02 PM Page 54

SpecialReport: Permian Powerhouse
drilling oil wells, but higher natural gas prices are a benefit to
Pioneer in the form of additional revenue from the production
stream.

The Permian has seen plenty of ups and downs
over the years, but it has no doubt become the
crown jewel of U.S. unconventional resource plays. Where
do you envision things going from here in the basin?
DEALY: The Permian Basin will undoubtedly continue to be

the major source of U.S. shale production. Global demand has
strongly rebounded from the April and May lows, and you have
seen that reflected similarly in oil prices. We expect oil prices
to further improve as global demand recovers, with a high likelihood that a vaccine is developed by the end of this year or
early next year. We continue to believe having a strong balance
sheet, combined with being a low-cost operator with strong
margins and the best returns, places Pioneer in an enviable
position, allowing us to generate free cash flow and return
capital to shareholders.

Tip Of The Spear

TRENT LATSHAW
President
Latshaw Drilling Company LLC

With oil prices stabilizing in the $42-$43 range this
summer, operators have restored the vast majority

of shut-in production and are turning their attention to re-

that OPEC+ continues the high compliance levels to its supply
reduction agreement, I am optimistic that we will continue to
get the supply/demand equation back into balance. Given the
lack of drilling activity around the world, and the rapid decline
rates of U.S. shale wells, there's actually the potential for the
world being in an undersupplied scenario in oil going into
2022. I kept telling everyone last spring that this too shall pass.
And I am sure looking forward to seeing it!

across the basin in 2021?

Operators have recorded 40% and higher reductions
in spud-to-rig-release drilling times in the Delaware
and Midland basins over the past three years. That's a remarkable accomplishment, made possible by the crews
manning the rigs. From the contractor's perspective, what
have been the keys to achieving ever-faster drilling times?
Are we still seeing reductions in drilling days, or are we
nearing a point of maximum efficiency?

LATSHAW: Our rig count bottomed at five in June and has
increased back up to eight active rigs recently. However, a
couple of those are on short-term work to drill two-three wells
so they could go back down. We are optimistic that we will put
a couple of more rigs back to work in the fourth quarter.
I do think the national rig count has probably bottomed out
at this point, and hopefully so has the Permian. It may bump
along bottom for a while longer, but I am not anticipating any
big continued drops from here. Having said that, if there's any
consistency in the history of my predictions, it is how often I
have been wrong!
As always, activity levels are dependent on commodity
prices, and they in turn, are dependent on global supply and
demand, and we all know what the supply/demand story has
been during the past few months. Assuming the world continues
to crawl out of this COVID lockdown in 2021, and assuming

LATSHAW: I think the main drivers for this continued improvement in drilling times has been improvements in downhole
tool technology (bits, mud motors, measurement-while-drilling
tools, etc.), and the natural progression of a learning curve both
for the rig crews and the operators' company personnel. As with
anything, the more times you do something repetitively, not only
do you get better, but you find incremental ways to tweak the
process to save time and become more efficient.
I won't say that we can't still find ways to shave off some
more time on wells, but as with every cycle, I think we are
probably close to our peak efficiencies. We see this every
downturn. We get much more efficient as we get to the bottom
of the cycle out of necessity and because only the best crews
are still working, and then when we start coming off bottom
and activity increases, we start to lose some of these efficiencies
because we are having to hire either new people to the industry

suming the drilling and completion of new wells. Do you
expect more of Latshaw's rigs to be called back into action
this fall? As a contractor, you know better than most that
this business is all about ups and downs. Looking at the Permian, are we seeing the bottoming out of rig counts? How
do you see the pace of recovery in drilling activity proceeding

54 THE AMERICAN OIL & GAS REPORTER

American Oil and Gas Reporter - September 2020

Table of Contents for the Digital Edition of American Oil and Gas Reporter - September 2020