Duc = drilled uncompleted

Continental noted in its annual report that it had DUC's. Where the DUC is one of a group of wells and they have one of the group in the section producing that appears to hold the lease!

Anyone know which wells are the DUC's?

Comment in Annual Report is the number of DUC's as of the end of 2015 will increase at the end of 2016. Do not know if they mean the same DUC's or new DUCS!

Any thoughts?

I think mineral owners need prudent operations and commencement language in their leases.

I am curious about this topic also. At what point is a well no longer held-by-production (HBP)? I know you can consider HBP with only a (very) minimal amount of production, but I don't see how even that can occur if the well is DUC (ie, not completed).

This is a fuzzy area right now since a well that is drilled, but not completed is actually not exactly held by production (HBP). The State of ND has ruled a time frame for DUCs to be completed. OK has not yet done that. Prudent operations are an implied covenant in the lease already without being in words, but it is good to put it in there. Commencement language may not help in this case, because it is completion not commencement. In my opinion, prudent operators are waiting to frac and complete until a better price environment and also because crews are getting less available due to layoffs. 12-15 months seems reasonable. There will be a whole lot more new DUCs in 2016. Personally, I am not too worried about them, (yet,) since the products are more valuable in the ground waiting than in the pipeline right now. I may change my mind in 12 months.

I brought the question up at a panel discussion this week at the NARO-OK which included a legislator and one of the commissioners. Hope we caught their attention to the issue.

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What were the panel’s thoughts? Did they understand the issue?

The commissioner was a bit surprised that it hadn't been brought before them and said she would start thinking about the issue. The legislative advocate helped by saying that leaving those holes open without completing was opening up some big legal questions. Hope the spark takes. Hoping the board members of NARO also start talking about it more.

It’s disappointing but not surprising that the commissioner wasn’t more helpful. I foresee a huge legal fight in the near future. Please tell me it was Dana Murphy…