Bakken Update: EOG, Whiting Well Results Prove Parshall Field More Productive Than The Sanish

Jul.14.13 | About: EOG Resources, (EOG)

There are no two better fields in the Williston Basin for middle Bakken results than Parshall and Sanish. Parshall and Sanish fields are the focal point of EOG Resources' (NYSE:EOG) and Whiting's (NYSE:WLL) Bakken plays. EOG and Whiting were some of the earliest operators; this kept acreage costs down but also provided its pick of the best leaseholds. These two fields have seen more development than any other area of the Bakken. All have very good results, but both have a different history. Geology is not much different, except the depth of the middle Bakken and Sanish Sands.

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The Three Forks is also shallower than around the Nesson Anticline. Shale thickness seems consistent in both the middle Bakken and Three Forks. The isopach below shows Bakken thickness of over 120 feet. Keep in mind thicker shale does not necessarily mean better EURs; it could provide a larger number of locations. This is evident in the picture below.

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Whiting believes it can maintain seven locations per mile in the Sanish Field. The lower Bakken shale is extremely thick in both the Sanish and Parshall fields. It will maintain only three in the upper Three Forks. The Hidden Bench prospect is very interesting as it plans to drill eight locations in the middle Bakken, but this probably has to do with the Bakken Silt being thicker in this area. The upper Three Forks could be a big deal in this leasehold as it plans seven locations. It is twice as thick as in Mountrail County. The Pronghorn Sands may have something to do with this as well, but that is a guess on my part. Obviously, the Bakken is the focus in both Parshall and Sanish. Below is a Bakken isopach.

The Three Forks is comprised of two to four layers or benches of shale. The Three Forks has seen less development than the middle Bakken. EURs of the Three Forks in Mountrail County have lagged other areas. Northeast McKenzie County's Three Forks' locations have been the best in play, but there have been excellent Pronghorn Sands results in Billings and Stark counties. As seen above, the first bench of the Three Forks is somewhat thin compared to McKenzie County. Below is a Three Forks' map providing shale thickness.

The thickest shale is found in northwest Dunn and southeast McKenzie. Mountrail County looks promising at an approximate 225 feet. Shale thickness isn't the issue here, as Parshall Field produces less natural gas and exhibits lower pressure than northeast McKenzie County. It is also not as deep. Both should affect IP rates and EURs in a negative manner.

With respect to well design, these companies couldn't be more different. EOG used mainly short laterals with tight stages and large amounts of water and proppant. EOG has kept its wells on a very tight choke, but has opened its wells up some in 2012 and 2013. It has kept its costs down by self sourcing sand, and being very good at cutting costs. It was also the first operator to rail Bakken crude to St. James for LLS pricing. This significantly increased crude revenues, obtaining LLS pricing. Whiting uses long laterals with longer stages and smaller amounts of water and proppant. It has used a middle of the road choke size that inflates IP rates early with depletion being a little higher. EOG has been able to use a better well design and keep costs lower, while Whiting has kept costs in check by using less sand and water. Whiting and EOG have been able to keep costs low in these prospective fields.

EOG started developing the Parshall Field at around the same time as Whiting started working the Sanish. The big difference has to do with the amount of wells turned to sales. EOG completed 22 wells in 2006 and 2007. One of these wells is on pace to produce revenues over $100 million. Below is the Parshall well design over that specific timeframe.

Well Lateral Ft. 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
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Some of the above wells are missing data on water and proppant. Water, proppant and stages were not documented by most operators this early. This lack of data creates some issues, especially with respect to stage length. This may be one of the most important factors, as it improves source rock stimulation.

As a comparison, I have produced a table of Whiting's well results in the Sanish Field from 2006 to 2008. I could not generate enough data to produce a good average number with just 2007. This is important as EOG paved the way for other operators, and its results are twelve months earlier than Whiting's. I think this gives Whiting a little bit of an advantage as it was able to see what EOG was doing for an additional year. Below I have provided Whiting's well design and results for this specific timeframe. It produced 26 results compared to EOG's 22.

Whiting's Sanish Field Well Design 2006-2008
Well Lateral Ft. Stages Water Bbls. Proppant Lbs. 30-Day IP Bo/d 90-Day IP Bo/d 180-Day IP B/od
16092 4994 495197 69 59 42
16068 6190 474452 124 198 159
16731 7625 1900000 862 663 582
16463 9815 1141429 714 598 469
17072 9398 1240000 817 670 660
16902 9516 1840000 859 620 494
17137 9644 17975 1844000 572 463 354
16905 8739 18985 1598000 594 416 340
17173 9612 17560 1801000 824 593 482
17391 9538 17925 1841000 1339 1013 839
17035 9466 1841000 850 856 761
17133 8872 1793000 636 671 432
17158 9500 19246 1840000 1254 1056 916
17023 9443 1625500 1281 999 873
17134 8607 19407 1840000 953 674 620
16852 9432 1244000 793 672 531
17253 9509 19125 1840000 894 723 568
17586 9698 19232 1830000 547 579 509
16780 7719 1951000 878 680 549
17032 9473 1069000 655 573 466
17284 9461 16723 1451700 389 271 233
16781 8365 2044160 880 491 347
16734 8482 1963740 402 320 278
17240 9378 17765 1539000 590 414 280
17081 9645 19208 1842000 1311 1013 828
17092 9537 1705000 1124 799 1019
Avg. 8910 18468 1599776 777 619 524
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The above tables show like numbers for both water and proppant. EOG used a much better design with short laterals throughout. Whiting did have a couple of early wells that were quite low in production. This did hurt its average, as one well produced a 180-Day IP rate of 42 Bo/d. Whiting almost immediately moved to long laterals, which did improve its total EURs per well. IP rates of EOG's short laterals are better than Whiting's long laterals. EOG used twice the water and proppant per foot, but was able to produce more from less. The water and proppant amounts did better EOG's production, but it would seem source rock stimulation is the key to overall long-term production. It would seem EOG has found a good balance between stimulation, water and proppant usage. EOG's cumulative production is listed below. As stated in earlier articles, EOG's Parshall Field has produced more of the top 20 cumulative oil producers than any other operator.

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
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The above results are incredible. Using $90/Bbl crude and $4/Mcf, we see significant earnings in Parshall Field. The average well produced over $35 million in revenues. Granted, the gas lines may not have been in, and oil prices did sink during "The Great Recession," but I had to use a set price for comparison. Its wells have produced a little over five and a half years. This leaves another 30 to 35 years of production. Depending on the model used, we could see these revenues double over the life of all these wells. This would bring the average to over $70 million/well. I would guess these wells will not model like current completions. Most of these wells used no ceramic proppant. Given the depth and pressure, we could see the sand crushed under the weight of the formation. This would shut off the resource to the well. There is a chance that EOG's numbers outperform due to where it drilled middle Bakken wells. Most of its wells were drilled diagonally through each mile. This could be the best area of the shale to drill and complete, but it makes pad drilling a little worrisome. Whiting did a nice job of planning ahead so it could infill easier, with less worry about communication between wells. Below I have provided the cumulative production for Whiting's Sanish wells.

Whiting's Cumulative Production
Well Crude Crude Revenues Gas Gas Revenues Total Revenues Days
16092 31814 2863260 49578 198312 3061572 1692
16068 159388 14344920 130069 520276 14865196 2307
16731 479609 43164810 308466 1233864 44398674 1928
16463 375379 33784110 353033 1412132 35196242 2146
17072 508737 45786330 291408 1165632 46951962 1495
16902 341596 30743640 232623 930492 31674132 1719
17137 219645 19768050 185010 740040 20508090 1432
16905 198300 17847000 186501 746004 18593004 1064
17173 249042 22413780 225781 903124 22516904 1440
17391 563571 50721390 319378 1277512 51998902 1528
17035 717402 64566180 446761 1787044 66353224 1621
17133 404239 36381510 281300 1125200 37506710 1485
17158 791220 71209800 492213 1968852 73178652 1602
17023 616908 55521720 396387 1585548 57107268 1692
17134 399443 35949870 273997 1095988 37045858 1633
16852 397390 35765100 243363 973452 36738552 1585
17253 366545 32989050 213240 852960 33842010 1346
17586 367671 33090390 229660 918640 34009030 1644
16780 442113 39790170 299180 1196720 40986890 1830
17032 303236 27291240 189529 758116 28049356 1519
17284 124478 11203020 141089 564356 11767376 1327
16781 428482 38563380 635610 2542440 41105820 1818
16734 221863 19967670 188622 754488 20722158 1568
17240 185729 16715610 218675 874700 17590310 1398
17081 600365 54032850 312909 1251636 55284486 1570
17092 919147 82723230 568258 2273032 84996262 1694
Avg. 400512 36046080 285102 1140408 37186488 1619
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Whiting's wells produced a little over a year and three months less than EOG's. Average revenues were better by a little less than $2 million. It did this with slightly less water and proppant per well. The differences aren't seen until we break down design and production per foot of lateral.

Operator Water Bbls/Ft. Proppant Lbs./Ft. 180-Day Production Bbls./Ft.
EOG 4.3 397 23.6
WLL 2.1 180 10.6
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The results were really surprising, as well design does seem to factor in short and long term results. These two fields are right next to each other, sharing the eastern Sanish border with the western Parshall border. Although geology could differ significantly from one mile to the next, it doesn't seem to be the main factor for the difference in these results. The results indicate short laterals produce better source rock stimulation. This produces more and better fractures. This followed by more water and proppant per foot will not only increase short-term, but also long-term production. Even more interesting is the percentage of increase in production per foot when compared to water and proppant per foot. EOG used 215% more water per foot than Whiting. It also used 221% more proppant per foot. This resulted in an increase of 223% of total barrels of crude produced per foot at 180 days. This suggests a correlation in the percentage of returns from water and proppant to production.

In summary, it is my belief that geology is the predominant factor in developing a model for production in the Bakken/Three Forks. That said, the best middle Bakken acreage is in southwestern Mountrail County. The Sanish and Parshall fields seem to have a dominant geology, as do Alger and Ross fields in the same area. Companies like Statoil (NYSE:STO) and Hess (NYSE:HES) have significant leaseholds in Alger and Ross, and have had their best results in those specific areas. This is obvious in other areas as well, and the reason QEP Resources (NYSE:QEP) paid top dollar to get into Grail Field. Halcon (NYSE:HK) also paid to get Petro-Hunt's Fort Berthold acreage, while Kodiak (NYSE:KOG) bought Liberty. All of these areas have out-produced neighboring fields and will probably continue to do so. I am not saying that I believe Whiting or EOG Resources will be purchased; only that operators will pay a significant price per acre to get into that specific geology. Geology can be manipulated through well design. EOG continues to dump three times the proppant/foot in the Bakken and Eagle Ford. This has produced some of the best completions in 2012 and 2013. It has been replicated in southwest Mountrail, northeast McKenzie and western Williams counties. Kodiak purchased Liberty Resources for its well results in western Williams and northern McKenzie acreage. Liberty had similar results to EOG in western Williams, by using three times the water. I would guess the best areas have much better natural fracturing, but an operator still needs to properly stimulate the source rock to garner those resources.

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.