Bakken Update: Kodiak, Enerplus Outperform South Of Nesson Anticline; Exxon, Conoco Struggle

 |  Includes: COP, ERF, KOG, WPX, XOM
by: Michael Filloon

Northeast McKenzie County may be the hottest area in the Bakken. It is a top notch stacked play with very good geology. Mountrail County is the home of almost all the top producing wells. The Parshall Field middle Bakken pay zone is thicker, and has higher concentrations of crude. It produces 92% crude versus northeast McKenzie's 78%.

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The picture above shows the different thicknesses of the Bakken and Three Forks. The Sanish Field (located next to Parshall) has a very thick middle Bakken. Its upper Three Forks is much thinner. This is why little has been said about the Three Forks in initial development. In the Sanish Field middle Bakken EURs are around 950 MBoe, while the upper Three Forks is closer to 500 MBoe. In northeast McKenzie County these pay zones produce EURs that are much more comparable. To show where each area described in the first picture is located, I have provided the map below.

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Whiting's (NYSE:WLL) Tarpon Prospect is to the north and west of Grail Field. This is considered by many to have the best Three Forks producing field. The upper and second bench of the Three Forks is much thicker in this part of the basin. The Hidden Bench is west of Grail. The reason I identify these two prospects is Three Forks development would be much like both prospects. Looking at Whiting's development in the Tarpon, we see much fewer locations. Currently it plans three middle Bakken, two upper Three Forks and three in the second bench of the Three Forks. This is by no means exciting, as the Sanish Field could potentially produce 7 wells and another 3 in the upper Three Forks. The reason Tarpon has such a low number of prospective wells is activity. Whiting's Tarpon Prospect is small (6258 net acres) and less wells will be drilled in this area. Also, there is a significant natural fracturing in the area. Looking at Hidden Bench, there are 8 prospective middle Bakken locations and 7 upper Three Forks. The additional middle Bakken wells are targeting a new zone, the middle Bakken silt. Whiting will target this zone with half of the 8 total wells. The upper Three Forks, not including any other benches, could hold up to 7 wells. There is no reason to believe northeast McKenzie County couldn't produce the same number of locations.

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Continental is currently in the process of three 320-acre density tests, and one 160-acre. One of the 320-acre tests are located in northeast McKenzie County. Keep in mind, this includes three wells in the third bench.

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The combination of middle Bakken and Three Forks benches provides significant upside to northeast McKenzie County. In previous articles I have covered different fields and found the area to be highly productive with emphasis on the upper Three Forks. The focus of my last article was Grail and Antelope fields. East of Grail is Squaw Creek, which is south of Antelope Field. This is a very active field on Fort Berthold. WPX Energy (NYSE:WPX) is active in this field.

WPX Well Results In Squaw Creek Field

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
19973 8847 29 52995 3383697 556 354 279
20238 9003 30 51524 3262879 557 378 287
20320 9334 30 50392 3510781 724 558 460
20603 9041 30 51290 3000074 445 401 326
20711 3898 17 29428 1894368 331 246 175
20995 3765 17 39176 2207139 356 326 271
21063 4090 17 30309 1965508 231 120 101
21445 3657 17 31432 2105107 471 481 399
Avg. 6454 23 42068 2666194 459 358 287
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WPX's long lateral results are a little disappointing. Its long laterals had average stage spacing with average amounts of water and good amounts of proppant. There is a significant increase in crude production per foot from its short laterals. There is good reason for this, as stages get much shorter, or a little over 200 feet on average. This compares to its long lateral stages closer to 300 feet. Water and proppant per foot also increases dramatically. If it weren't for the short laterals, WPX's data would have come up short. This well design, coupled with a short lateral, is a big improvement. Keep in mind short laterals provide better source rock stimulation. Not only does the operator have better control of the lateral, it also allows for more effective usage of pump trucks to better stimulate the toe.

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To the east of Squaw Creek is Mandaree Field. Enerplus (NYSE:ERF) is active here.

Enerplus Well Results in Mandaree Field

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
20102 3654 14 12920 1666172 355 612 454
20103 3279 12 8695 1111060 716 563 400
20977 4129 14 10759 1751540 623 568 436
20499 3626 11 8115 1381800 505 392 320
20978 3540 14 12640 1752880 490 353 255
20101TF 4059 10 11060 1119200 551 420 342
21784TF 10148 25 28182 2698440 551 408 322
21785 9990 24 18201 2577360 608 435 407
22726TF 10017 29 31261 2609720 944 669 507
Avg. 5827 17 15759 1852019 594 491 383
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ERF's production is quite good. Its short laterals outperformed, but long laterals were still good. The big difference in long lateral performance may be how well the operator can change each stage to the surrounding geology. The geology can change significantly over two miles, and it is not uncommon for several stages to produce little or nothing. If each stage is designed properly, more resource will be garnered. Enerplus uses very low volumes of water, and it is interesting the results were this good. On a side note, Mandaree Field is located in Dunn County. This article is focusing on northeast McKenzie, but given the similarities in production numbers, it was included in this piece.

Just south of Grail is Lost Bridge. This field is also located in Dunn County. Exxon (NYSE:XOM) has been active here.

Exxon's Well Results In Lost Bridge Field

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
19185TF 9784 18 37902 2219330 453 361 334
19187TF 10431 18 49791 2571120 185 162 144
19566 9578 24 68052 3046865 348 399 397
19960 9941 30 75041 3494590 873 714 510
20520TF 9961 24 58981 2607639 286 224 218
20521 8540 24 52124 2269536 417 376 340
22248 9178 24 56021 2675398 457 471 393
Avg. 9630 23 56845 2697783 431 387 334
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Exxon has used long laterals exclusively in this field, with long stages. As you could guess, this was not a good combination. This in concert with inadequate amounts of water and proppant produced poorly. Exxon had better results in the middle Bakken than the upper Three Forks, which is a little strange. I would guess this has more to do with Exxon drilling more middle Bakken wells. Since it has more experience with this source rock, results were better. As a comparison, Grail Field is just a few miles to the north of Lost Bridge. Its average 180-Day IP rate was 701 Bo/d. This is more than double Exxon's results.

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Kodiak (NYSE:KOG) has acreage in both Mandaree and South Fork Fields. I decided to use both in this article to provide enough data to formulate proper results.

Kodiak's Well Results in South Fork Field

Well Lateral Ft. Stages Water Bbls. Proppant Lbs 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
19587TF 9515 30 92472 4290428 971 658 496
20926TF 9198 24 70587 2893800 736 499 365
19817 2856 14 39128 1659324 660 460 374
21224TF 8968 28 80347 3829100 812 747 616
21064 8916 30 80059 4550000 674 472 340
Avg. 7891 25 72519 3444530 771 567 438
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Kodiak has decent results in South Fork. It continues to produce good results from long laterals. Kodiak has been able to accomplish this using 300 foot stages and lots of water and ceramic proppant. I had one excellent well in this field. More importantly is its consistency, as all of its wells had good results. Kodiak is also active in Heart Butte Field. It is just east of Mandaree Field.

Kodiak's Well Results In Heart Butte Field

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
21700TF 4790 18 56242 2734336 530 389 317
21701 9143 29 63564 4524531 701 495 378
20511TF 8999 28 89363 4253349 1034 842 662
19263 7625 27 83653 4070716 839 753 576
22468 8435 27 83751 3998102 526 347 244
22467 8120 27 84653 4059685 677 466 365
Avg. 7852 26 76871 3940120 718 549 424
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Kodiak had two excellent wells in this area, one of which targeted the middle Bakken.

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Conoco (NYSE:COP) has been very active in Haystack Butte. This field is to the southwest of Grail. Conoco's production here is a good example of how IP rates can be altered due to operator completion changes. Conoco would frac part of the horizontal and bring to production. It does this three to four times, bringing parts of the lateral to production over time.

Conoco's Well Results In Haystack Butte Field

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
20077 9222 30 29989 2182421 406 301 226
19865 9147 19 46417 2489500 528 439 361
20447 9160 33 135847 827402 407 302 252
20930 9093 30 105165 3364500 368 382 260
21409 8885 31 59452 471067 599 462 304
21058 9111 20 64717 2984100 55 118 82
20817 9015 30 75229 3362300 185 300 283
21742 9009 30 46568 3330389 618 474 373
Avg. 9080 28 70423 2376460 396 347 268
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The above results are all over the board and first indications are this completion method is not successful. Conoco had the worst production average of all operators in this article. Also, there is no consistency to design. Some of these long laterals used very low amounts of proppant, while others used very large volumes of water. Conoco's well results may have been skewed due to how it reports its IP rates. In some of the above wells, it would report production over a larger number of days in the first month than were actually producing. It also shut down production in some of these wells over the winter months. I would guess there isn't pipe in the ground to transport crude, so instead of trying to truck it out, Conoco shuts the well for a few months. Either way, many of these wells did have production problems.

Well Results By Operator Per Foot

Co. Feet/ Stage Water/ Foot Proppant/ Foot 180-Day Production/ Foot
WPX 281 6.5 413 8.0
ERF 343 2.7 318 11.8
XOM 419 5.9 280 6.2
KOG/SF 316 9.2 437 10.0
KOG/HB 302 9.8 502 9.7
COP 324 7.8 262 5.3
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These results show an outperformance of Enerplus and Kodiak. Neither had fantastic production, which is surprising this close to Grail Field. It is possible these fields are not as productive as in the other articles I have written on northeast McKenzie County. As an example, Conoco only produced 5.3 Bo/d in Haystack Butte over the first 180 days. In Charlson Field, the number improves to 11 Bo/d.

Well Economics For Operators In Northeast McKenzie County

Well Co. Total Oil Bbls. Oil Revenues Total Gas Mcf Gas Revenues Days Total Revenues
20320 WPX 131263 11813670 100690 402760 396 12216430
22726TF ERF 107358 9662220 64416 257664 234 9919884
19960 XOM 216215 19459350 222284 889136 571 20348486
21224TF KOG 204684 18421560 155516 622064 490 19043624
20511TF KOG 136951 12325590 105607 422428 238 12748018
21742 COP 72412 6517080 86767 347068 216 6864148
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Above are the revenues produced from each operator's best well in its prospective field. The majority of these wells pay out in the first year, or will do this going forward. Total revenues show exactly how easy it is for wells to reach a one year pay out. Conoco's well was anything but huge and it has already produced almost $7 million in revenues after just 7 months of production. Well 20511 was a great well, and Kodiak has generated almost $13 million in revenues in almost 8 months.

In summary, we continue to see a large number of economic wells in northeast McKenzie County. Not only are these wells economic, but we are seeing a larger number with one year pay outs. Although production per foot is much better with short laterals, tight stages and more water and proppant, we continue to see more operators using long laterals. This has been very good for operators like Kodiak, which has proven its laterals are sound at a two mile length. We are starting to see a decrease in production to the south of Grail Field in northeast McKenzie County. The sweet spot is 30 miles north to south from Charlson to Grail Field. From east to west, it covers 20 miles from Twin Valley to Sanish Field. I excluded Sanish, Parshall and Alger fields, as it is a different type of production. The northeast McKenzie sweet spot has increased natural fracturing and natural gas production. Parshall Field and the surrounding areas have a much larger percentage of crude. Northeast McKenzie County will not only produce higher EURs, but it will do this in both the middle Bakken and upper Three Forks. This does not necessarily mean these wells will produce larger revenues, as southwest Mountrail County will produce a much larger percentage of crude.

Disclosure: I am long KOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This is not a buy recommendation. The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, are not guaranteed for accuracy or completeness, do not reflect actual investment results, do not take in consideration commissions, margin interest and other costs, and are not guarantees of future results. All investments involve risk, losses may exceed the principal invested, and the past performance of a security, industry, sector, market, or financial product does not guarantee future results or returns. For more articles like this check out my website at Fracwater Solutions L.L.C. engages in industrial water solutions for oil and gas companies in North Dakota. This includes constructing water depots, pipelines and disposal wells. It also provides contracting services for all types of construction at well sites. Other services include soil remediation. Please contact me via email if you are interested in working with us. More of my articles and other pertinent information on the oil and gas sector, go to