U Lateral Economics A Big Deal

Economics drives drilling U laterals in stranded sections. In the Delaware Basin, where the most U laterals have been drilled, a 25-40% increase in ROR is realized by replacing one-mile laterals with U laterals.

The completable lateral footage for two one-mile, a two-mile and a U lateral are compared. The two-mile lateral is shown for comparison, but it is not an option with stranded sections. They footages for the two one-mile laterals and the U lateral are similar.

Drilling costs and costs per completed foot show the cost saving using U laterals. This example is for wells drilled in the Delaware Basin, but the savings should be representative of wells drilled using intermediate casing. The drilling costs savings using U laterals is about $2.5MM.

The completions costs are driven by the completable footage stimulated. The two-mile lateral has more footage and is more expensive than the U lateral. The two one-mile laterals are at a cost disadvantage because of extra rental for surface equipment, two production tubing strings run on two wells instead of one in a U lateral and the additional tripping time. The completions cost saving using U laterals is about $1MM.

The U lateral total well costs are $4MM well than 2 one-mile laterals. This includes, drilling, completions and facilities costs. The U and two-mile lateral costs are nearly identical, but on a cost per foot, the two-mile lateral are cheapest.

Matador 3^rd Quarter, 2023 Earning Release–$5MM savings for each U lateral drilled. The savings are real.

ROR Increase:  25 – 40%

Cost Reduction:  $3.5MM – $4.0MM

(Matador Savings:  $5.0MM for each U lateral)