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For the last five years or so, horizontal wells drilled with large rigs and drilling pads has been the picture in most people’s minds when they think of the oil and gas industry.

With the downturn in pricing many of these rigs have been stacked due to uneconomic plays.

Conventional oil and gas and vertical wells have largely been considered low hanging fruit and a staple of many producers’ portfolios that can get ignored when pricing is favorable and other plays are hot. Some companies in light of today’s environment might give more light to their vertical drilling programs as the costs associated are far less than that of their horizontal counterparts and economics are still favorable. The areas that will be hit the worst in today’s pricing environment are those where the unconventional boom occurred that do not have large scale conventional formations to fall back on for vertical drilling and production.

Figure 1.1: US Well Starts by Month colored by trajectory

States such as Texas and Oklahoma have had a fairly consistent amount of vertical well starts while their horizontal counterparts have decreased. One region where unconventional formations are still hot, horizontal or vertical is the Permian. This is due to lower break even costs and a robust midstream system that has been in place for a long time. The Permian is not new to the E&P space, with many wells having produced for decades regardless of macro environment. An increase in the push for horizontal wells has been increased due to being one of the few economical plays left in the current environment.

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