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Marathon's (NYSE:MRO) purchase of Hilcorp shifted attention from the Bakken to the Eagle Ford. At $25000/acre, or approximately $21000/acre plus current production, companies are willing to pay more for Eagle Ford acreage. Marathon paid a premium for a large acreage adjacent to its current leasehold. This decreases costs, but the main reason is the Eagle Ford's multiple pay zones. Marathon will have more net locations when comparing its Eagle Ford and Bakken acreage.

Marathon's Bakken Leasehold

  • 375000 Net Acres

  • 450 Potential Net Locations

  • $7 million cost/well

  • 30 day IP rate of 350 to 700 Boe/d

  • EUR of 350 to 500 Mboe/well

  • 190 MMboe of Net Resource Potential

Marathon's Eagle Ford Leasehold (Pre-Hilcorp Purchase)

  • 120000 Net Acres

  • 600 Potential Net Locations

  • $5.5 to $6 million cost/well

  • 30 day IP rate of 350 to 400 Boe/d

  • EUR of 250 to 400 Mboe/well

  • 170 MMboe of Net Resource Potential

Brigham (BEXP) is setting the bar for oil production from the Williston Basin. It has set one production record after another from the Bakken/Three Forks. It is selling at a major discount to its all time high of $37.87. Brigham has 378100 net acres in the Williston Basin with approximately 224400 net acres in its de-risked core acreage. The average Brigham well will generate an NPV (Net Present Value) of $10.9 million. NPV is the difference between cash inflows and cash outflows. It shows the overall profitability of each well. This NPV is figured using these values:

  • $8.9 Million in Well Costs

  • EUR (Estimated Ultimate Recovery) of 600 Mboe

  • 5-31-11 NYMEX Strip

This produces a 75% IRR (Internal Rate of Return). The IRR is best described as the rate of growth a project is estimated to generate. An average Brigham well in the Williston Basin will generate an estimated undiscounted payback period of 1.5 years.

There are 841 possible well de-risked locations. Brigham's future projects provide a possible 1380 locations. A total of 2221 well locations are possible within Brigham's project area. By the end of last year, 58 of these locations had already been booked. At $10.9 million/well, it is obvious what the amount of income this company will generate at an EUR of 600 Mboe. If the EUR is increased to 700 Mboe, the NPV increases to $14.2 million. It would increase the ROR (Return on Revenue) from 75% to 98%. The undiscounted payout would decrease from a 1.5 to 1.1 years.

Brigham has drilled seven of the 10 highest IP rate Bakken wells. Brigham's last ten wells with a documented 30 day IP rate from the most previous are:

  1. Sorenson 29-32 #2H--1815 Boe/d
  2. Cvancara 20-17 #1H--1577 Boe/d

  3. Gibbins 1-12 #1H--1101 Boe/d

  4. Knoshaug 14-11 #1H--1390 Boe/d

  5. Lloyd 34-3 #1H--1456 Boe/d

  6. Bratcher 10-3 #1H--1129 Boe/d

  7. M. Macklin 15-22 #1H--1062 Boe/d

  8. M. Olson 20-29 #1H--1007 Boe/d

  9. Heen 26-35 #1H--1379 Boe/d

  10. Arvid Anderson 14-11 #1H--1330 Boe/d

Brigham's average 30-day IP in North Dakota is 1111 Boe/d. Its Eastern Montana average is 519 Boe/d. Brigham's Ross area Bakken wells have an average IP rate of 3483 Boe/d. Its Ross area Three Forks wells produced an average IP of 2249 Boe/d. Brigham's Rough Rider area wells had an average IP of 2628 Boe/d. In summary, Brigham is estimating wells will produce 600 Mboe. A change from 600 Mboe to 700 Mboe would increase the NPV by $3.3 million/well.

Kodiak Oil and Gas (NYSE:KOG) is also on sale, down from its all time high of $7.70/share. It has approximately 70000 net acres in the Bakken/Three Forks. East of the Nesson Kodiak 's EURs are between 750 to 850+ Mboe. The average well will cost between $8.5 and $9 million. In 2010, Kodiak completed its TSB #14-21-33-15H. This well was completed in December and had an IP rate of 2050 Boe/d. Its 90 day IP rate was 706 Boe/d. Kodiak's TSB #14-21-33-16H3 had an IP rate of 1042 Boe/d. Its 60 day IP was 444 Boe/d. Only six out of the 22 stages were completed. The year 2010 saw a major increase in production totals year over year due to longer laterals, increased stages and larger volumes of ceramic proppant. The difference in production was:

  • 30 day IP of 1170 Boe/d in 2010 vs. 669 Boe/d in 2009

  • 60 day IP of 1073 Boe/d in 2010 vs. 565 Boe/d in 2009

  • 90 day IP of 972 Boe/d in 2010 vs. 449 Boe/d in 2009

EUR expectations are between 750 and 850 Mboe. Two variables can change NPVs significantly. The first variable is EURs. The second is the realized price of oil.

Bakken Long Lateral with an EUR of 750 Mboe

  • $75/barrel produces an NPV of $8.6 million and a 27 month payout

  • $85/barrel produces an NPV of $11.4 million and a 23 month payout

  • $95/barrel produces an NPV of $14.1 million and a 20 month payout

Bakken Long Lateral with an EUR of 850 Mboe

  • $75/barrel produces an NPV of $11.1 million and a 23 month payout

  • $85/barrel produces an NPV of $14.2 million and a 20 month payout

  • $95/barrel produces an NPV of $17.3 million and a 17 month payout

Two long laterals drilled in the third quarter of 2010 had very good production numbers. MC #13-34-28-1H had IP rates of:

  • 24 hour IP of 1906 Boe/d

  • 30 day IP of 1082 Boe/d

  • 60 day IP of 1074 Boe/d

  • 90 day IP of 932 Boe/d

  • 180 day IP of 723 Boe/d

The MC #13-34-28-2H had IP rates of :

  • 24 hour IP of 2055 Boe/d

  • 30 day IP of 1259 Boe/d

  • 60 day IP of 1073 Boe/d

  • 90 day IP of 932 Boe/d

  • 180 day IP of 655 Boe/d

In summary, Kodiak has seen large improvements in production. EURs between 750 and 850 Mboe are expected. An 850 Mboe EUR at $95 oil will produce a NPV of $17.3 million/well.

Whiting (NYSE:WLL) has 678248 net acres in the Bakken/Three Forks. Of its $1.35 billion exploration and development budget for 2011, $707 million will be spent on the Bakken/Three Forks. Whiting was the number one producer in the Bakken, based on the second half of last year. It has 72 wells drilled and six month total production of 7221 (Mboe 10). Its six month average production/well (Mboe 10) is better then Brigham's (BEXP), by Whiting estimates. Whiting's Sanish wells have done very well in 2011. Here is a list of wells with documented 60 day IP averages.

  • Arndt 14-5XH had a 60 day IP of 598 Boe/d

  • Niemitalo 31-15XH had a 60 day IP of 685 Boe/d

  • Heiple 14-3XH had a 60 day IP of 865 Boe/d

  • B. Roggenbuck 24-25H had a 60 day IP of 567 Boe/d

  • Sikes State 43-16H had a 60 day IP of 1052 Boe/d

  • Brehm 12-7H had a 60 day IP of 253 Boe/d

  • Ness 21-3H had a 60 day IP of 546 Boe/d

The average 60 day IP for wells completed by Whiting in the Sanish Field averaged 652 Boe/d. Whiting has the largest difference in EUR expectations in the Bakken. It gives numbers that vary from 450 Mboe to 950 Mboe. Although 950 Mboe is a very big number, the Sanish has had productive wells. The average is very close to the top end of Brigham's EURs. These estimates are broad, but gives an idea of how profitable a well could be at the top end of EUR and oil prices. Another consideration is well cost, as Whiting estimates $5.5 million. There is a wide range of production possibilities in Whiting's Sanish Bakken wells. A well that produces a EUR of 450 Mboe with NYMEX oil price of $70/barrel would produce:

  • IRR of 56%

  • Payout of 1.6 years

  • PV(10) of $4.061 MM

At $80 NYMEX:

  • IRR of 91%

  • Payout in 1.1 years

  • PV(10) of $5.959 MM

At $90 NYMEX

  • IRR of 133%
  • Payout of .9 years
  • PV(10) of $7.861 MM

A well with an EUR of 950 at $70 NYMEX would produce:

  • IRR of 395%

  • Payout in .64 years

  • PV(10) of $16.053 MM

At $80 NYMEX:

  • IRR of 676%

  • Payout in .55 years

  • PV(10) of $19.93 MM

At $90 NYMEX:

  • IRR of 1138%

  • Payout in .48 years

  • PV(10) of $23.807 MM

Whiting's Sanish Three Forks wells have lower production possibilities. It is estimating the Three Forks will generate an approximate EUR of 400 Mboe. Whiting estimates a well cost of $5.5 million. If a NYMEX price of $70/barrel is realized, these wells will produce:

  • an IRR of 40%

  • a payout of 2.1 years

  • a PV(10) of $3.13 MM

At $80 NYMEX:

  • an IRR of 63%

  • a payout of 1.5 years

  • a PV(10) of $4.846 MM

At $90 NYMEX:

  • an IRR of 92%

  • a payout of 1.2 years

  • a PV(10) of $6.566 MM

Whiting has a potential for 500 locations in its 245744 net acres in the Lewis & Clark. Well costs of approximately $6.5 million are estimated. Lewis & Clark wells are expected to produce EURs of 350 to 500 Mboe. Whiting's most current Lewis & Clark wells with documented 60 day IP rates are:

  • Hecker 21-18TFH had a 60 day IP rate of 1307 Boe/d

  • Mann 21-18TFH had a 60 day IP rate of 312 Boe/d

  • Teddy 44-30TFH had a 60 day IP rate of 412 Boe/d

  • Teddy 44-13TFH had a 60 day IP rate of 169 Boe/d

  • Ellison Creek 11-1TFH had a 60 day IP rate of 326 Boe/d

  • Froehlich 44-9TFH had a 60 day IP rate of 819 Boe/d

  • Kubas 11-13TFH had a 60 day IP rate of 530 Boe/d

  • Federal 32-4HBKCE had a 60 day IP rate of 531 Boe/d

  • MOI 22-15H had a 60 day IP rate of 200 Boe/d

  • Buckhorn Ranch 31-16H had a 60 day IP rate of 267 Boe/d

In summary, Whiting is a great way to play the Bakken. It has several good properties including some EOR and Permian acres. It has completed the second most wells in the Bakken/Three Forks as a distant second to EOG Resources (NYSE:EOG). Whiting's production numbers show it is the number one producer. This is based on Whiting having the highest six month average production (Mboe 10).

An overview of Brigham's, Kodiak's and Whiting's results shows interesting differences. Kodiak's average IP rates are calculated from a lower number of wells. This makes assessing its acreage more difficult. Kodiak has improved production/well significantly this year. It performed two longer laterals with increased stages producing 24 hour IP rates of 3042 and 2327 Boe/d. These numbers are much better than its competition. Nineteen wells were completed last quarter with an average IP rate of 1590 Boe/d in the Bakken by other companies. Brigham's average IP rates in North Dakota are very good.

  • Average 24 hour IP is 2831 Boe/d

  • Average 30 day IP is 1111 Boe/d

  • Average 60 day IP is 837 Boe/d

Whiting's numbers are also good.

  • Average 24 hour IP is 1560 Boe/d

  • Average 30 day IP is 689 Boe/d

  • Average 60 day IP is 652 Boe/d

Company EURs differ significantly from one company to the next.

  • Brigham expects EURs of 500 to 700 Mboe/well

  • Kodiak expects EURs of 500 to 700 Mboe/well West of Nesson

  • Kodiak expects EURs of 750 to 850 Mboe/well East of Nesson

  • Whiting expects EURs of 450 to 950 Mboe/well in the Sanish-Bakken

  • Whiting expects EURs of 400 Mboe/well in the Sanish-Three Forks

  • Whiting expects EURs of 350 to 500 Mboe/well in the Lewis & Clark

Well costs also are quite different

  • Brigham has an estimated well cost of $8.9 million

  • Kodiak has an estimated well cost of $8.5 to $9 million East of Nesson

  • Kodiak has an estimated well cost of $8 to $9 million West of Nesson

  • Whiting has an estimated well cost of $5.5 million in the Sanish

  • Whiting has an estimated well cost of $6.5 in the Lewis & Clark

To compare these Bakken-focused companies to those of the Eagle Ford please read 'Marathon May Have Increased the Value of Eagle Ford Leaseholders: Part 1, Part 2, Part 3, Part 4, Part 5.'

Disclosure: I am long BEXP.

Additional disclosure: This is a list of companies operating in the Bakken/Three Forks. It is only a list and not a buy recommendation. Commodity pricing can vary significantly in a short period of time. Due to this, large losses can occur in these investments. I recommend thoroughly studying companies before investing. I may initiate a long position in Kodiak Oil and Gas (KOG) with in the next 72 hours. Source: Brigham (BEXP) Source: Kodiak (KOG) Source: Whiting (WLL)