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What is a DUC?

Drilled-but-uncompleted well. DUCs are a partially completed source of supply that can be brought to market more quickly and at less cost than a newly drilled well. Producers typically keep a number of DUCs in their inventory for operating, development and perhaps speculative reasons, and pundits can compare this baseline to current levels in an attempt to assess the movement of the next potential price cycle. If we equate the stages of completion to inventory treatment in financial accounting, wells yet to be drilled would be raw materials, wells drilled but uncompleted would be work-in-progress, and producing wells would be finished goods. Equity and fixed income traders potentially can gain an edge by understanding where an industry is in its inventory cycle. 

For example, manufacturers amassing raw materials may be getting ready for a surge in orders, whereas a rise in finished good could suggest the current up cycle is losing steam. Changes in work-in-progress inventory could suggest the market is moving toward one of those two extremes, just as changes in DUCs can precede a move toward over or underproduction in the market.

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