EOG Parshall Field Well On Track To Produce Revenues Over $100 Million

Jul. 9.13 | About: EOG Resources, (EOG)

There are a number of opinions as to the best areas of the Bakken. I have gathered well data from good and not so good areas. Focal points of the Bakken are northeast McKenzie, northwest Dunn, western Williams, and southwest Mountrail counties. Each area is different, but all produce very good revenues. There are other areas currently being worked in Dunn, Burke, Billings, Stark and Golden Valley that have shown promising results in North Dakota. Montana also has shown production improvements. The Bakken covers a vast number of miles, and has several formations producing. The middle Bakken, Three Forks benches, and Red River are just a few. The best acreage will produce wells from all formations. Northeast McKenzie County has good middle Bakken and Three Forks producers, making it a great area for pad drilling. When compared to southwest Mountrail, these wells produce higher percentages of natural gas and natural gas liquids. This has produced some very good IP rates as the gas helps propel the crude up and out of the well. Now that the Three Forks continues to be de-risked, we are finding it may hold more resource than the middle Bakken. In fields like Grail, there have been multiple upper Three Forks' wells with EURs well above 1000+ MBoe. It is difficult to know how good the deeper benches are, but several operators have commented it is every bit as good as the first. There are other very good areas, but none are as good as the middle Bakken of the Parshall Field.

The Parshall Field is by far the best in North Dakota. Its middle Bakken wells produce more crude, and between 96% and 98% liquids. Most of the top 20 Bakken producers were completed in this field. In this article, I am going to compare very early Parshall Field well results to current northeast McKenzie County completions.

Bakken bears use Parshall as an example as to why the best areas are already drilled in North Dakota. The initial well results from here were excellent, better than any other area. When other areas were drilled the results were not as good leaving investors unsure of how it would all play out. In addition, EOG Resources (NYSE:EOG) tends to model its wells very conservatively. I don't disagree with this, as it will never disappoint shareholders, but it gives the impression other wells will produce less. EOG is consistent as it maintains it conservatism in the Eagle Ford. It still uses 400 MBoe as an average EUR. As an example, here are the total crude barrels produced from several of its units in the Eagle Ford from January to June of this year.

EOG Eagle Ford Production From 1/13 Through 6/13

Unit Crude Production Bbls Gas Production Mcf
Guadalupe 618331 759805
Brothers 311932 379593
H.F.S. 311446 314268
Mitchell 366915 509665
Click to enlarge

The above data collected is not from one well, but all the wells in that specific field. The production totals are from January of this year through April. There are eight producing wells in this field and the bulk of this production occurred in March and April from pads. The other fields have several wells producing, but not the number in Guadelupe. Most of these wells are generating 40 to 60 thousand barrels per month from short laterals. Wells in the best areas model to EURs of 1500 MBo. In Gonzales County it would not be surprising if the average well produces 1000 MBo. Other counties are not as good but LaSalle County wells are closer to 600 MBo. Take EOG models with a grain of salt, as it is very conservative.

EOG's results in Parshall Field are not as good, but still better than any other area. Below are its results from 2006 and 2007.

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
16370 3764 672 484 408
16371 4392 17190 1590000 1367 937 681
16469 4705 24704 2198291 1037 869 690
16483 4394 18149 1691400 1127 812 600
16550 4433 17041 1919090 927 633 506
16578 4753 20414 2052859 1040 729 610
16671 4638 17661 1803224 862 683 555
16713 4664 18980 1948307 1382 1000 821
16768 4471 20059 1910795 1626 1133 903
16795 4308 25653 1624300 1476 1017 1038
16164 1803 312 225 242
16324 2575 549 367 350
16346 5371 749 509 443
16457 4250 17693 1091000 971 731 623
16461 4957 470 456 479
16467 4292 17665 1789276 730 472 437
16497 4472 18007 1738700 852 844 614
16532 4840 19535 2039800 1136 745 595
16543 5082 18220 1538557 947 668 522
16635 4569 18630 1752960 461 427 385
16637 5293 21344 2182146 953 724 557
16776 3458 7310 414000 770 548 444
Avg. 4340 18721 1722630 928 682 568
Click to enlarge

EOG does not provide its proppant and water usage in 2006, which makes it difficult to see the variations in production. As we get into 2007 this changes, and it consistently provides this data. These numbers are not that exciting until measured on a per foot basis. I will go over this later. Below I have listed well results in northeast McKenzie County.

Whiting's Twin Valley Field Results

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
20589 9413 30 30816 1993832 1367 1260 1132
22361 11518 30 40919 2729068 1795 1289
Avg. 10466 30 35868 2361450 1581 1275 1132
Click to enlarge

Whiting's (NYSE:WLL) Twin Valley results are atypical. From what I understand, this field has a very large amount of natural fracturing. It is an anomaly and I do not believe we will see wells like this very often. Still huge money makers for Whiting.

QEP Resources' (NYSE:QEP) are also quite good in Grail Field. Helis originally operated this acreage, until QEP purchased its leasehold. Below is a list of results.

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
19680TF 9144 28 76942 2674660 1138 774 644
19898TF 9452 27 78608 3338206 1492 1033 787
21052TF 8929 28 79799 3109015 757 632 504
21054TF 9113 28 78796 3144880 1056 868 597
21437TF 9171 30 89653 3594290 1055 791 682
21465TF 9208 29 79012 3532991 1311 1029 919
20780TF 9128 28 78632 3071795 1194 977 787
21456TF 9405 31 84655 3591030 1404 953 735
22820TF 9259 30 81044 3656740 1071 839 656
Avg. 9201 29 80793 3301511 1164 877 701
Click to enlarge

These results are proof why QEP was willing to pay top dollar for Helis's acreage. It will be interesting as to how well QEP does over the first six months as an operator.

Halcon (NYSE:HK) also purchased very good acreage from Petro-Hunt in Antelope Field. Those results are below.

Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP Bo/d
18426TF 9643 27 79515 3172504 786 656 531
20088TF 9877 29 80500 2736620 742 778 729
20328 9705 26 71295 2675830 1238 942 776
20567 9290 24 71962 3203737 664 603 515
23550 9133 26 71516 2625720 582 506
Avg. 9530 26 74958 2882882 802 697 638
Click to enlarge

Enerplus (NYSE:ERF) is another outperformer. It seems to do a good job with longer laterals, and uses a decent amount of water/proppant. Its wells also deplete slower than others producing a nice 180-Day IP average.

Parshall Field's outperformance is not truly seen until we break down well results by the foot. This whole field was developed using one mile laterals. I have heard a large number of reasons for this type of development from geology to spacing. In reality, EOG realized its results diminished when it drilled laterals longer than 5000 feet. The farther away the toe of the well gets from the operator, the more taxing it is on the pump trucks. Below I have broken down EOG's Parshall results with the results of other operators in northeast McKenzie County Fields.

Well Results By Operator Per Foot

Co. Feet/ Stage Water/ Foot Proppant/ Foot 180-Day Production/ Foot
EOG 271 4.31 397 23.6
ERF 343 2.7 318 11.8
WLL 349 3.4 226 19.5
QEP 317 8.8 359 13.7
HK 367 7.9 303 12.1
Click to enlarge

Since EOG's wells were drilled much earlier than the other operators', we do not have good documented info on how many stages it used on these wells. From the information I have gathered these wells probably averaged 16 per well. This is a real general estimate as I only have future well stages to use as an example. I used the low end of EOG's 2008 well design stage length. EOG, even at this early a stage of development, had also found the upside to large amounts of proppant.

Looking at production per foot, it is easy to see why the Parshall Field is the focal point of the Bakken. Not only were these wells completed in 2006 and 2007, its production is much better than a couple of the best wells drilled by Whiting in 2011 and 2012. This is not to say that Whiting's wells are not profitable, even with Parshall wells doing better. In 530 days, Whiting's well 20589 produced revenues of almost $33 million.

Well Crude Crude Revenues Gas Gas Revenues Total Revenues Days
16370 370492 33344280 166576 666304 34010584 2096
16371 479801 43182090 233971 935884 44117974 2157
16469 462136 41592240 234438 937752 42529992 1938
16483 454640 40917600 195031 780124 41697724 2182
16550 351183 31606470 106714 426856 32033326 1917
16578 427362 38462580 245121 980484 39443064 1948
16671 396281 35665290 203978 815912 36481202 1990
16713 499899 44990910 235356 941424 45932334 1863
16768 555980 50038200 235439 941756 50979956 1939
16795 565908 50931720 275709 1102836 52034556 1959
16164 178103 16029270 78951 315804 16345074 3295
16324 290335 26130150 130151 520604 26650754 2327
16346 413969 37257210 192953 771812 38029022 2244
16457 390696 35162640 150464 601856 35764496 2053
16461 432806 38952540 177378 709512 39662052 2148
16467 283518 25516620 146344 585376 26101996 1966
16497 400060 36005400 169988 679952 36685352 1977
16532 427685 38491650 221441 885764 39377414 2094
16543 369957 33296130 174813 699252 33995382 2085
16635 217503 19575270 78919 315676 19890946 2038
16637 349557 31460130 117751 471004 31931134 1951
16776 269789 24281010 107890 431560 24712570 1642
Avg. 390348 35131336 167244 705341 35382132 2082
Click to enlarge

These numbers are incredible when you look at the best and worst wells on the list. These wells, using today's values ($90 WTI and $4 natural gas) have produced significant profits. Some wells have already produced over $50 million in revenues. Well 16795 was over $52 million, and by my estimates should double this over the life of the well. This means this is a $100 million short lateral, with well costs of $5.5 million. Even its worst results are good. Well 16164 has only produced approximately $16 million in revenues over the course of 9 years. Even this result is considered good, and will probably have revenues of over $20 million over the life of this well.

In summary, Parshall Field is the best acreage in North Dakota. This geology coupled with EOG's well design has produced wells that are much better than the Bakken average. It is possible northeast McKenzie County is as good, if the Bakken and Three Forks wells are also considered. Even so, Parshall Field has undoubtedly the best middle Bakken pay zone in the Williston Basin. Even when compared to the best wells drilled today, Parshall Field's early Parshall Wells are easily better. Some of this is due to well design, but the geology is the number one reason for its outperformance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.