Familiar themes continued to resonate at last week’s IPAA investor conference in New York: Liquids rule, natural gas is in the tank and likely to be there for a while, frac crews are hard to come by, and takeaway/processing issues are everywhere. One of the more interesting comments heard at the conference pointed to the industry putting another 200 rigs to work this year, followed by another 200 rigs in 2012.
Generally, The Land Rig Newsletter team believes the winds are blowing in a positive direction for adding rigs—relatively high oil prices driven by strong global demand and political instability in the Middle East. However, crosswinds from known—as well as unforeseen—sources will likely take some of the wind out of the sails, causing one to remain somewhat skeptical of such robust growth. Whether it’s the Rockies, Midcontinent, or Appalachia, it’s the same story: Plays are more complicated than commonly thought, frac crews are in short supply, and takeaway constraints are either present or near.