DEPARTMENTS • OIL & GAS MARKETS
Oil and gas M&A’s increased by 16% in 2021, with highest values in upstream sector
A total of 74 billion-dollar deals were
undertaken in the oil and gas industry
last year, compared with only 40 in 2020,
according to GlobalData. The recovery in
oil price likely encouraged companies to
undertake more high-value deals to push
forward their growth plans. In fact, the
largest deal in terms of value for 2021 was
announced toward the end of the year,
when prices were at multi-year highs .
Global mergers and acquisitions (M&A)
activity in the oil and gas industry grew
annually by 16% to reach $335 billion in
2021, considering M&As with known deal
Permian basin new well productivity and lateral lengths
BOED 11,000
1,100 1,000
900 Average new well productivity
10,000 Average perforated lateral length (RHS)
9,000 800
8,000 700
7,000 600
6,000 500
5,000 400
4,000 300
3,000 200
2,000 100
1,000 0
2010 2011
2012 2013
2014 2015
2016 2017
2018 2019
2020 2021
2022 E
0 Source: Rystad Energy ShaleWellCube, Rystad Energy research and analysis
Average productivity of new wells in the Permian has climbed steadily since 2010
and is closely aligned with the rise in average perforated lateral length.
Rystad Energy: Permian is ‘entering a 3-mile lateral era’
The average productivity of new wells
in the Permian Basin is set to hit a record
high in 2022, exceeding 1,000 bbl/day of oil
equivalent (BOED) due to a surge in lateral
well length, Rystad Energy research indi-
cates. New wells are expected to break the
1,000 BOED threshold in 2022 for the first
time on record, rising from the 974 BOED
achieved in 2021. Average daily production
levels have steadily climbed since 2010,
aligned with the horizontal well length,
which is expected to reach 9,500 ft in 2022.
The total completed lateral footage of
wells in the Permian is expected to reach
a record high of 50 million ft in 2022,
beating 2021’s total of 45.8 million ft and
pre-COVID-19 levels of 47.5 million ft seen
in 2019. In 2020, total lateral footage in the
basin dropped due to the pandemic , clock-
ing in at only 32.5 million ft .
Operators only started using ultra-long
wells, of up to 3 miles in length, in the
Permian in 2014, but their popularity has
quickly grown. Their market share has
rocketed from 4% of completions in 2017
12 to 18% in 2021. However, considering total
completed lateral footage in 2021, these
wells accounted for as much as 23% of
completions. The average horizontal well length in
the Permian increased to 9,300 ft in 2021,
up from 9,000 in 2020 . This increase sig-
nals a growing trend among operators to
favor longer wells as they seek to increase
productivity. “The Permian is now entering a 3-mile
lateral era,” said Artem Abramov, Head of
Shale Research at Rystad Energy. ”Such
long wells were viewed as inferior for
their high finding and development costs
in some deeper zones just a few years ago,
but modern equipment and completion
methods allow extended-reach wells to
spread across the entire basin .”
However, it may be too early to view the
increase in ultra-long laterals as an indus-
trywide trend in the Permian, as some key
operators contribute to this segment with
a disproportionally large weightage rela-
tive to their total number of completions.
value. However, in terms of deal volume,
M&A activity was largely flat at around
1,800 oil and gas deals in 2021.
The upstream sector contributed to the
highest M&A transaction value of $120
billion in 2021. It also recorded the high-
est growth of 48% compared with 2020.
Westwood: Nearly 47,000
onshore wells to be drilled
around the world this year
A new report by Westwood Global
Energy Group is forecasting that
approximately 46,700 onshore wells
will be drilled globally in 2022, utilizing
3,960 active rigs per day. While those
numbers are about 20% higher than
what was seen in 2020, it’s unlikely
onshore drilling activity will return to
levels that used to be seen when oil
prices were above $100 – unless there is
a long-term return to such levels.
In the US, Westwood expects 13,000
wells to be drilled this year, with an
average of 650 rigs. In 2023, 15,000 wells
are expected to be drilled with 751 rigs.
Independents, which account for more
than 50% of shale production, are still
wary of ramping activity up to where
it used to be and pushing oil prices to
unsustainable levels, the report noted.
In OPEC+ countries, because the pan-
demic-related decline in onshore drill-
ing activity had been more muted com-
pared with other regions, growth will
be less pronounced, as well. Overall,
Westwood expects OPEC+ members to
drill 23,000 wells in 2022-2023. Due to
the long-term nature of the infrastruc-
tural development plans ongoing in
these countries, a strong ramp-up in
drilling activity is not expected until
late in the 2020s .
In other parts of the world, Westwood
pointed to China and India as countries
where high oil prices and a heavy reli-
ance on crude oil imports will provide
incentive to increase domestic produc-
tion. Argentina is also likely to see a
major activity boost. In January, the
country’s shale oil production totaled
224,000 bbl/day and accounted for
nearly 40% of total production, which is
a 61% jump from the previous year.
M A R C H/A P R I L 202 2 • D R I L L I N G C O N T R AC T O R