Overview of 2020

In 2020, Darcy Members participated in a set of 2 SME roundtables on the topic of Workover Rig Operations.

During the first session in August 2020, the Darcy team presented the three different buckets where innovative technologies could positively impact operations. Below is the list:

1. Prioritizing activity: planning & scheduling of workover activity
2. Operational efficiency: remote monitoring & data collection
3. Downhole visibility & execution: instrumentation & optimization tools

The second session in November 2020 was co-led by a Permian-based operator who shared tips on action they took internally to reinvigorate their workover program. This included cross training their team and optimizing their workflows for well servicing operations. We polled the audience on whether or not they have also started exposing their teams to different roles in their organization and a majority (over 63%) had done so.

A third session that covered the space was held in a more intimate environment, the executive roundtable with Simmons Energy on “The State of Oilfield Services”. During this executive only event, the Simmons team discussed the market fragmentation that has occurred in the Land Drilling, Hydraulic Fracturing & Workover markets. To no ones surprise, the workover market seemed to be the most impacted of the three oilfield services markets with a huge reduction in CAPEX investment leading to essentially a flattening of revenue over the years.

Lessons Learned

In all three discussions, E&P operators were intrigued to learn about how their peers were making adjustments to their workover programs based on the market shrinking, number of rigs in operation, and how their relationship with subcontractors combined with the workload impacted their operating philosophy (24/7 or daylight operations). The answer to all three of these questions lies in one simple term operators introduced: deferred barrels and impact on the Time Value of Production.

Time Value of Production vs Workover Costs Instead of viewing workover operations in isolation, many operators have adopted an integrated approach. Rather than quantifying ROI in well services and intervention based on simply the balance sheet and how much is spent, operators are looking at the deferred barrels in production due to the well being serviced, which allows for a healthy amount of pressure be introduced into the equation to increase overall efficiency. This model moves away from the typical benchmark of hours spent or daylight versus nighttime operations and focuses the conversation on assessing the opportunity cost of production associated with that specific well that is being serviced.

As more and more operators take this approach of viewing workovers as an extension of maintaining production, the Time Value of Production, the conversation on number of rigs, adjusting priorities, and motivating subcontractors is much more clear and direct.

What to Expect for 2021

In late March, Darcy Partners will be releasing the Production Quarterly on Workover Rig Operations which will hold more information on what was discussed above and include insight on potential levers for innovation. If you would like Darcy to facilitate more events in the space of workover rig operations, please take a few seconds to fill out the poll and comment below.

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