scope:

EXECUTIVE SUMMARY

Drilling expenditures decreased significantly as the oil and natural gas industry spent less annually drilling and equipping wells in the U.S. in 2016 than it did in 2015. According to the 2016 Joint Association Survey on Drilling Costs (JAS), the industry spent 45 percent less in 2016 to drill and equip wells in the U.S. than it did in 2015. Total drilling expenditures were estimated to be $67.6 billion in 2016, compared to $122.8 billion during the previous year. In addition, the number of wells decreased considerably by 44.8 percent and total footage decreased by 42.2 percent. Although the number of wells and total footage decreased, the average depth per well increased 7.8% from 2015 to 2016, and the average cost per foot decreased 6.6% over the same period.

Expenditures decreased for all well types in 2016 relative to 2015 levels. Exploratory well expenditures in 2016 amounted to approximately $2.63 billion, a decrease of 53.4 percent from the previous year's $5.64 billion. Exploratory oil spending decreased 70.3 percent from $1.64 billion in 2015 to an estimated $487 million in 2016, while exploratory gas expenditures were estimated at $272 million in 2016, down 68.3 percent from 2015's $858 million. Development well expenditures were estimated to be $58.5 billion in 2016 compared with 2015's $109.6 billion, a 46.6 percent decrease. Spending decreased 48.4 percent to $38.0 billion in 2016 for development oil wells, compared to $73.7 billion in 2015. Development gas spending at $15.5 billion was down 44.0 percent compared to last year's $27.7 billion.

The industry continued to spend more drilling for oil than for natural gas. In 2016, oil expenditures accounted for 62.9 percent of the total drilling expenditures ─ down from last year's 65.4 percent; gas expenditures accounted for 25.8 percent ─ up from 2015's 24.8 percent; and dry hole expenditures reached 11.2 percent of total drilling expenditures ─ up from the past year's 9.9 percent.