America’s top shale field is becoming increasingly gassy as drilling slows down, undercutting profits for explorers as investors demand better returns.
America’s top shale field is becoming increasingly gassy as drilling slows down, undercutting profits for explorers at a time when investors are demanding better returns.
It’s an issue that’s made worse when subsequent wells are drilled too close to the initial one or when there’s interference from another producer’s neighboring wells.Diamondback Energy Inc. emerged in November as a victim of this phenomenon when it reported third-quarter well results that were disappointingly gassy. The percentage of oil was 65%, the lowest since at least 2011.
In April, gas traded at the Waha hub in West Texas dropped to minus $4.63 per million British Thermal units. In other words, producers had to pay to get their gas taken away.Smaller producers with rising gas ratios have taken the hardest hit as prices tanked. Over the last year, Approach Resources Inc. has reported oil production that was less than one quarter of its total output. The company filed for bankruptcy protection in November.
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