Most oilfield contractors and suppliers are familiar with or have at least heard of DUC wells. There are tremendous opportunities available for contractors and suppliers in regions with high DUC well inventories. Developing an understanding of DUCs, and the effects they have on drilling activity will guide oilfield service company owners as they search out new work.
Although there are varying definitions of what a DUC well is, most people in the industry use the standard definition of a well that has been drilled and not yet completed. Some industry analysts will assign a timeframe between drilling and completion, for example, six months, and classify any uncompleted well as having drilling finished, but no well completion activity taking place. DUC well completion activity generally includes running production casing to the production area, perforating and stimulating the well, and then beginning production.
Every oil and gas producing region has DUC wells. The primary resource to look into is the US Energy Information Administration website. Visitors will find data on DUCs by region as well as useful information on DUC well history and trends.
Oilfield contractors or suppliers who are expanding their service areas can use drilling activity reports from sources like Rigdata to learn who the major operators are in different regions. Using this information to establish new contacts and solicit work can be effective.
Monitoring DUC well inventories can provide insight on future drilling activity. As oil prices rise, operators will complete DUC wells as a fast way of increasing production. In times of declining oil prices, as was the case beginning in 2014, many operators continue to drill wells due to rig contracts, but did not complete these wells and bring them into production. Analysts think of DUC wells as low hanging fruit, as the costs of drilling have been paid, and completion work will not be as costly as new drilling.
DUC wells represent an opportunity for oilfield contractors and suppliers who specialize in well completion work. There is not much difference in completing a DUC well versus a new well. Trucking firms that haul casing, frac sand, or water are in demand. Cementers, wireline testing, and roustabouts can all find the same work on DUC wells as newly drilled wells. The opportunity DUC wells have is continued work when new drilling and completions slow down.
Doing completion work on a DUC wells takes cash flow. Since 1994, TCI Business Capital has supplied oilfield contractors and suppliers with same day cash flow through invoice factoring. Instead of waiting 30 days, 60 days, or longer for payment on invoices, companies using factoring get immediate access to their cash. TCI Business Capital customizes factoring programs to meet the situation and needs of each client. For a free, no-obligation assessment and factoring quote contact us via the web form, or call 800-707-4845.