US drilling activity
US drilling activity has remained strong, supported by strong crude oil prices. According to Baker Hughes (BHI), the total US rig count reached 990 on March 16, 2018, compared to 789 during the same period in 2017 and 929 by the end of 2017. This represents year-over-year and year-to-date increases of 201 and 61, respectively.
The Permian region, which is one of the most prolific shale plays in the US, has seen the greatest increase in rig count growth. The total rig count in the Permian reached 437 as of March 16, 2018, compared to 308 during the same period in 2017 and 398 by the end of 2017. The Permian region is followed by the Marcellus, Williston, and Anadarko Basins.
Drilled but uncompleted wells
In terms of drilled but uncompleted wells (or DUCs), the Permian region had the highest inventory of 2,937 wells by the end of February 2018. The Permian region is followed by the Eagle Ford region, which had total DUCs of 1,492 as of February 2018.
The Anadarko Basin has the third-highest DUCs after the Permian and Eagle Ford Basins.
US crude oil production forecast
According to the recent STEO (short-term energy outlook) report, the EIA (Energy Information Administration) expects crude oil production to grow 14.8% in 2018 compared to 2017. The Permian region is expected to lead in terms of production growth.
Plains All American Pipeline (PAA), Energy Transfer Partners (ETP), and Andeavor Logistics (ANDX) are among the midstream MLPs that are expected to benefit from strong Permian crude oil production growth.
US natural gas production forecast
The EIA expects US natural gas production to grow 11.3% in 2018 versus 2017. The US Northeast and Permian regions are expected to lead in terms of natural gas production growth over the coming years.
This trend is expected to benefit Appalachian- and Permian-based midstream MLPs such as MPLX LP (MPLX), Antero Midstream Partners (AM), Williams Partners (WPZ), DCP Midstream (DCP), and Crestwood Equity Partners (CEQP).