American Oil and Gas Reporter - January 2012 - 98

Outlook 2012
FIGURE 2

FIGURE 3

Operators' 2012 Drilling Plans Compared with 2011
50.0
23.7

26.3
Small

4.5
22
22.7

72.7

Medium

66.7

13.1
26.2
26
2

60.7
Oil

Will Drill More

22.2

11.1

51.4

5.3
15.8
15
8

78.9

10.8
37.8

Large

63.3
13.9
22.8

Gas

All

Will Drill Same

Will Drill Fewer

scribed-will be larger than 2011, while 51.4 percent of small
drillers say they plan to spend more money drilling this year than
last. Saying they will spend the same amount this year as last are
37.8 percent of the small category of survey respondents, 31.8
percent of medium drillers, and 31.6 percent of large drillers.
Oil Versus Gas
Not surprisingly, survey respondents who drill predominately oil wells are considerably more upbeat about 2012 than are
those who drill more natural gas wells. Oil well drillers project
a 42.2 percent increase in total 2012 drilling plans, compared
with a 19.3 percent increase for gas well drillers (Figure 1).
Interestingly, 66.7 percent of gas well drillers say they expect to drill more wells this year, compared with only 60.7 percent of the oil driller category (Figure 2). Another 26.2 percent
of oil well drillers say they will drill the same number of wells
in 2012 as they drilled in 2011, while only 13.1 percent say
they will drill fewer wells, compared with 11.1 percent of gas
well drillers who say they will drill the same number and 22.2
percent who say they will drill fewer.
Some of the apparent anomaly in drilling plans may be explained by the type of planned drilling. Half of the gas well
drillers report at least some of their 2012 wells will be drilled
horizontally, compared with only 21 percent of oil well drillers
who expect to drill horizontal wells. Among survey respondents who indicate some horizontal drilling in 2011 or 2012,
58.3 percent say they will drill more wells this year, while only
12.5 percent will drill fewer.
Crude oil focused survey respondents regain their edge in
spending plans, where 56.7 percent of the oil category say their
2012 drilling budgets will exceed their 2011 budgets (Figure
3), and another 35.0 percent say their drilling budgets will remain the same, compared with 50.0 and 33.3 percent, respectively, for gas well drillers.
Altogether, 63.3 percent of survey respondents say they will
drill more wells this year than last, while 22.8 percent say they
will drill the same number of wells. More than half (56.4 per98 THE AMERICAN OIL & GAS REPORTER

Operators' 2012 Spending Plans Compared with 2011

Small

8.3

56.7
35.0
Oil

Will Spend More

9.1

59.1
31.8

5.3
31.6

Medium

50.0
16.7
33.3

63.2

Large

8.9

56.4
34.6

Gas

All

Will Spend Same

Will Spend Less

cent) of all survey respondents indicate they will spend more
this year drilling wells than last, while 34.6 percent say they
will spend the same.
Getting 'Oily'
There is no doubt 2012 will be an "oily" year. Survey respondents report 71.3 percent of their 2012 wells will target
conventional oil formations while another 12.4 percent will
seek unconventional oil targets. Conventional natural gas targets get the nod on 9.4 percent of survey respondents' planned
2012 wells, while unconventional dry gas formations will be
targeted on only 1.2 percent of 2012 wells, and unconventional wet gas will be the prize in 5.6 percent of wells.
Generally speaking, the 2012 Survey of Independent Operators indicates a strong preference for drilling conventional oil
formations. Among all respondents, conventional oil wells comprised 66.9 percent of 2011 drilling and rise to 71.3 percent in
2012. "Small driller" respondents go from 67.1 percent conventional oil in 2011 to 76.9 percent in 2012; the medium category of drillers goes from 70.0 to 72.1 percent conventional
oil wells; large drillers move from 66.0 percent convention oil
in 2011 to 70.4 percent in 2012; while the oil driller category
reports 77.8 percent conventional oil wells in 2011 and 81.0
percent in 2012. Gas well drillers are the only respondent category that does not project a sizeable increase in conventional
oil drilling, and even here, the percentage remains essentially
flat at 17.5 in 2011 and 17.6 in 2012.
This preference for conventional oil drilling comes at the
expense of all gas-directed drilling. Conventional and both unconventional wet and dry gas wells accounted for 19.0 percent
of survey respondents' 2011 drilling and are projected for only
16.2 percent of 2012 wells.
The slide in gas-directed drilling carries across all survey
categories. Small drillers' proportion of total gas wells slips
from 30.4 in 2011 to 17.9 in 2012. For the medium driller category, natural gas directed drilling slips from 27.5 percent in
2011 to 23.9 percent in 2012. Gas drilling drops from 14.4 per-

American Oil and Gas Reporter - January 2012

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