CALGARY, Alberta (Dec. 16, 2024) — Enverus Intelligence® Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS company that leverages generative AI across its solutions, has released two reports analyzing drilling trends, economics and subsurface drivers from wells in both the Denver-Julesburg (DJ) Basin in Colorado and the Powder River Basin (PRB) in Wyoming.
Considering cost savings like those achieved by three-mile wells in the Bakken in North Dakota, EIR expects extended laterals can make the DJ and PRB basins more competitive to major Lower 48 basins.
“To date, operators have proven they can successfully navigate the nation’s biggest surface setback regulations in Colorado’s DJ Basin,” said Morgan Howrish, analyst at EIR. “We expect the three largest operators in this basin, who own 95% of the most economic inventory remaining, to be able to maintain or even boost activity levels despite the state’s strict limits on drilling locations.”
“In Wyoming, operators drilling wells with longer laterals in the PRB are driving down costs and improving economics, enabling the play in Wyoming to compete with other oil- and gas-producing areas in the U.S.,” said Ryan Hill, principal analyst at EIR. “We expect the change will drop costs by as much as $10 per barrel and lower the PRB’s breakevens to about $50 per barrel, or roughly equivalent to the average economics in the Rockies counterpart, the Williston Basin.”
Key takeaways on the DJ:
- The Denver-Julesburg (DJ) Basin is one of the most consolidated plays in North America. Just three operators own 95% of drilling locations estimated to break even at or below $50/bbl WTI.
- Operators wanting to achieve high recoveries face a choice of tightly spaced wells with small completions or wider spacing paired with larger fracture stimulations.
- The DJ is a mature play, meaning companies outside these three operators are increasingly drilling wells in fringier areas that generate poorer returns compared to those in the Wattenberg field, the long-time core of the play. EIR recommends companies should shift to wider spacing and bigger fracs to minimize capital efficiency degradation while developing extensional acreage.
Key takeaways on the PRB:
- Devon Energy is the only company successfully drilling wells with -mile lateral sections to develop the Niobrara formation in the PRB in Wyoming. These wells generate breakevens of ~$50/bbl, an improvement of up to 15% compared to nearby 2-milers.
- EIR believes 3-mile wells will provide a rare tailwind for the PRB’s Niobrara. The zone has averaged $60/bbl breakevens since 2021, hampering its competitiveness with unconventional targets in major Lower 48 plays.
- Three-mile wells are recovering 10% more oil than 2-milers. Operators historically developed the Niobrara at four wells per section, but EIR expects wider spacing in the future at three or fewer wells.
EIR’s analysis pulls from a variety of Enverus products including Enverus DSU Analytics, Enverus Forecast Analytics, Enverus Foundations®, Enverus Geoscience Analytics and Enverus Placed Well Analytics.
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About Enverus Intelligence® Research
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations and macro-economic forecasts; and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. EIR is registered with the U.S. Securities and Exchange Commission as a foreign investment adviser. Enverus is the most trusted, energy-dedicated SaaS company, with a platform built to create value from generative AI, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 95% of U.S. energy producers and more than 40,000 suppliers. Learn more at Enverus.com.
