Bakken Update: Top Eagle Ford Wells Of All Time Are Moving To The Bakken Part II

|
Includes: CLR, EOG, HES, OAS, STO, TPLM, WLL
by: Michael Filloon

In part one of this article, I compiled data on EOG's (NYSE:EOG) well design in the Eagle Ford. The reason was to show its outperformance with respect to the competition. I assert that EOG's results have just as much to do with well design as geology. The acreage in Gonzales County could be the best in the United States. The difference in results from one operator to the next does prove EOG is doing a better job drilling and completing. Its frac design is the most important. EOG now concentrates on stimulating the source rock close to the well bore, as opposed to long fractures. This is producing very strong IP rates while using a very tight choke. It has began using this in the Bakken with great success.

EOG's proclamation that its Bakken/Three Forks wells now have a comparable rate of return with the Eagle Ford further supports its completion technology as the reason for higher production/foot. Some say EOG has outperformed the competition for years, which would be true. The difference is its recent change in using more than twice the proppant. I also believe its acreage in northeast McKenzie County is better than the Parshall Field. This will further bolster EUR improvements. Below is a list of wells drilled by different operators.

Well Operator Lateral Choke Stages H2O Proppant
21378 EOG 6475 24/64 32 79855 6867099
22587 Statoil (NYSE:STO) 9930 128/64 39 92489 3883780
22868 Whiting (NYSE:WLL) 8437 48/64 22 24731 1716416
21182 Kodiak 9304 34/64 19 50574 1546067
21884 Continental (NYSE:CLR) 9597 30/64 39 68090 3828310
21912 Hess (NYSE:HES) 9300 28/64 30 36329 1285745
22350 Oasis (NYSE:OAS) 10020 68/64 28 66254 3507779
19738 Triangle (NYSEMKT:TPLM) 9657 30/64 31 82504 3918293
Click to enlarge

The above numbers provide some useful information. It shows how some operators spend more on completions. This is done for reasons I highlighted at the first part of this article. More water and proppant are used to open up fractures and not allow it to close. Shorter stages provides better stimulation of the source rock. It is important to figure these numbers by the foot, as lateral lengths can significantly affect how successful the well design will be. The table below breaks down these wells further.

Well Feet/Stage Proppant/Stage Proppant/Foot Water/Foot
21378 202 214597 1061 12.3
22587 255 99584 391 9.3
22868 384 78019 203 2.9
21182 490 81372 166 5.4
21884 246 98162 399 7.1
21912 310 42858 138 3.9
22350 358 125278 350 6.6
19738 312 126397 406 8.5
Click to enlarge

Each operator has its own design. Statoil has used Brigham's well design since it purchased the company. It has always used large amounts of water and proppant. Most of the proppant used is ceramic. Its best of everything approach creates large IP rates. This coupled with a wide open choke has produced some of the largest IP rates in North Dakota. This doesn't help EURs, as these wells produce more initially, but deplete faster. Statoil has acreage all over North Dakota and Montana. Its most prolific wells are located in the Ross and Alger Fields. These wells are as good as the Sanish, but do lag Parshall Field. This company has pioneered the advancement of using all ceramic proppant and also zipper fracs. This is a solid operator.

Whiting tends to use less proppant and water. This has to do with well costs. Considering the amounts, it seems to get a lot of bang for its buck. Whiting's acreage is very good. The Sanish Field is thought of as one of the core areas of the play. Not only are these wells performing very well, it is done with well costs much lower than other operators in the same general vicinity. I believe the decreased use of proppant and water has to do with HiWay Fracs. It is also important to comment on the Pronghorn. Whiting has done more than any other operator in the Pronghorn Sands. It recently stated this source rock can handle 6 wells/640 acre spacing.

The example above does not show it, but Kodiak has one of the best and most expensive well designs in the Bakken. It uses the best of everything and this shows in its results. In the deeper areas, it uses 100% ceramic proppant, and recently moved to sand in its lower pressured parts of the play. It generally uses 3000000 pounds of proppant and 80000 bbls. of water per long lateral. It was the first to show the potential in north McKenzie County. Its Koala wells have EURs over 1000 MBoe. Even more importantly, its Three Forks wells have performed close in line with the middle Bakken. It 10 well pads in Polar and Smokey will give us an idea of how these larger projects will perform. Look for a big bump in production in the third quarter if everything goes as planned.

Continental has made big moves in well design over the past couple of years. I have been impressed with how quickly it has increased proppant and water usage. It went from an operator that used the smallest volumes to one that is at the top end of the spectrum. Continental still uses a lot of sand, even in the deeper areas. It has preferred to follow sand with ceramic tails, and this has performed adequately. It has been one of the most active in the lower benches of the Three Forks, de-risking a significant number of acres.

Hess like Whiting, still uses less water and proppant than others in the play. Since it derives the majority of its growth from its unconventional U.S. plays, it continues to work the Bakken as hard as any company. It was one of the first operators in the Bakken, but results have lagged the competition. Hess is as active as anyone in pad drilling. Hess will help to provide estimated production and costs associated with this technology.

Oasis continues to be one of the better investments in the Bakken. Management continues to outperform, and the stock continues to appreciate. It has followed Statoil with respect to drilling and completing. It has significantly increased the amount of water and proppant it uses. This has improved IP rates and EURs significantly. Although the chokes are a little tighter, it isn't interested in keeping well pressures high. There is added benefit to its pressure pumping and midstream business. This is one of the top takeover candidates.

Triangle Petroleum is a very interesting company with acreage all over McKenzie and Williams counties in North Dakota. Well results have been excellent. Its well design mimics what Kodiak has been doing as it has chosen to spend money to make money. It uses about 80000 bbls. of water per frac and 4000000 pounds of proppant. This company may have more upside than any other Bakken player. It has a large amount of acreage near the Poplar Dome in Montana. This is a play on the Bakken/Three Forks and possibly the Red River.

Well results continue to be driven by source rock stimulation, volumes of water and pounds of ceramic proppant. EOG is outperforming with respect to all these variables. I have listed its most recent well results below.

EOG's Most Recent Bakken Well Design
Well Lateral Stages Water Proppant
22091 10277 50 112114 10369690
23421 9735 49 109753 9669220
19927 9656 48 112514 9905670
22962 8244 28 50810 3803752
22963 5792 29 45533 2842939
20334 6150 25 43084 2683304
20219 5071 21 55617 4862530
20726 6477 26 33687 2828786
20727 7689 31 42775 3367183
22704 10662 53 153900 10927550
22703 6810 34 93360 6972110
Click to enlarge

I included all wells completed in October of 2012 or later. As you can see it isn't using the same recipe for all of its completed wells. More importantly, it is using this technique on wells (19927, 23421) in western Williams County. This area is shallow and does not produce as well as northeast McKenzie or southwest Mountrail. In wells 20726 and 20727, EOG was testing southeast Burke County. This could be the reason for the decreased usage of sand and water. Below I have calculated each well on a per foot basis.

Well Feet/Stage Proppant/Stage Proppant/Foot Water/Foot
22091 206 207394 1009 10.9
23421 199 197331 993 11.3
19927 201 206368 1026 11.7
22962 294 135848 461 6.2
22963 200 98032 491 7.9
20334 246 107332 436 7.0
20219 241 231549 959 11.0
20726 249 108799 437 5.2
20727 248 108619 438 5.6
22704 201 206180 1025 14.4
22703 200 205062 1024 13.7
Click to enlarge

EOG is clearly trying out other less lucrative areas of the Bakken and how well it responds to its completion design. This is surprising as well costs would be significantly higher. The above data shows EOG's optimal well design has approximately 200 foot stages. It also uses 1000 pounds of proppant and 12 barrels of water per foot. This compares to 250 foot stages with 500 pounds of proppant and 6 barrels of water per foot. The table below provides production data for the above wells.

Well County Days Oil Production
22091 Mountrail 121 87868
23421 Williams 102 53631
19927 Williams 126 62469
22962 McKenzie 107 65560
22963 McKenzie 136 64986
20334 McKenzie 140 89402
20219 Williams 147 31233
20726 Burke 160 25665
20727 Burke 165 34502
22704 Mountrail 54 40078
22703 Mountrail 46 34289
Click to enlarge

The above data is very important from a geographic standpoint. The Mountrail County wells are very good, but this is expected given its success over the years. The McKenzie and Burke county wells were completed with longer laterals and lower amounts of proppant and water. This did significantly affect production. The Williams County wells were huge given the early results in this area. It is hard to model these wells due to the low number of days, but two out of the three in this article are quite a bit better than the EURs of 400 MBoe.

In summary, EOG continues to lead other operators with respect to all aspects of unconventional oil. It was the first to rail Bakken light to Louisiana for LLS pricing. EOG was the first to understand how larger amounts of water and proppant can positively affect production. It also keeps costs down by self sourcing its own sand. Now it has figured out how to better production by better stimulating the source rock near the well bore. This is a proven technology as EOG had refined it in the Eagle Ford and Permian. Early results in the Bakken are also positive. If western Williams in any indication, it could be used in the less productive areas of the play.

Disclosure: I am long OAS. 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 shaleexperts.com. 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 shaleexperts.com.