I recently covered three companies with Bakken exposure. This article was written to show the value of this basin when compared to other unconventional resource plays in the United States. There has been a large variance in IP rates from company to company and because of this it is difficult to figure estimated ultimate recovery. IP rates differ due to the production experience, location and by method of computing this rate. Longer laterals, increased proppant and stages all have increased initial production. New technologies are decreasing costs to help offset higher well service fees.
In the first part of this series, I covered the three Bakken players that are the most forthcoming with respect to expectations in the near and long term. This article will cover some of the remaining companies to give better demographic of estimates.
Oasis (OAS) is a pure Bakken player. This company is generally overlooked as Brigham (BEXP) steals much the headlines. Oasis has acreage in West Williston and East Nesson. Statistics on its West Williston wells are:
- 400 to 700 Mbo Gross Oil Reserves
- 450 to 787 Mboe Gross Reserves
- 536 to 915 Boe/d 7 day IP Average
- 415 to 708 Boe/d 60 day IP Average
- 359 to 613 Boe/d 90 day IP Average
Statistics on East Nesson wells:
- 350 to 600 Mbo Gross Oil Reserves
- 393 to 675 Mboe Gross Reserves
- 512 to 790 Boe/d 7 day IP Average
- 386 to 611 Boe/d 60 day IP Average
- 329 to 529 Boe/d 90 day IP Average
These numbers assume a well on a 1280 acre block with a 10000 foot lateral and 28 stages. Oasis estimates a 36 stage well will cost between $8.5 and $9 million. It is a good long term play, as it has 1303 gross identified locations primarily focused on the Bakken. Oasis is a very good investment going forward. Its high and low IP and EUR numbers are consistent with its competitors. It seems average EURs in the 600 Mboe range would be consistent with Brigham's numbers.
EOG Resources (EOG) has over 600,000 net acres in the Bakken/Three Forks. This is one of my favorite large oil and gas producers as they have done a very good job of accumulating unconventional oil acres at low cost. They have had very good IP in the Bakken/Three Forks:
- Mandaree 4-15H had an IP of 1490 Bo/d
- Mandaree 2-9H had an IP of 1358 Bo/d
- Mandaree 1-10H had an IP of 1659 Bo/d
- Mandaree 6-20H had an IP of 1565 Bo/d
- Mandaree 12-07H had an IP of 1559 Bo/d
- Liberty Pattern LR 19-23H had an IP of 1282 Bo/d
- Liberty Pattern LR 14-23H had an IP of 1124 Bo/d
- Liberty Pattern LR 10-36H had an IP of 1716 Bo/d
- Ross 27-2728H had an IP of 1038 Bo/d
- Bear Den Pattern 7-17H had an IP of 1882 Bo/d
- Bear Den Pattern 4-20H had an IP of 2116 Bo/d
- Round Prairie 10-1819H had an IP of 1458 Bo/d
- Ed and Paul 1-17H had and IP of 2000 Bo/d
EOG has had very good luck in the Montana Bakken. This shows the possibility that acreage in the Elm Coulee could have production much better than originally thought.
GeoResources (GEOI) has 46000 net acres in the Bakken/Three Forks. Of this, 25000 net operated acres are in Williams County. Its first 3 completed wells are:
- Carlson 1-11H had an IP of 685 Bo/d and 30 day IP of 238 Bo/d
- Siirtola 1-28-33H had an IP of 840 Bo/d and 30 day IP of 245 Bo/d
- Anderson 1-24-13H had an IP of 905 Bo/d and 30 day IP of 373 Bo/d
Several operators with competed wells in the region are:
- Horne 5603 44-9H with 30 day IP of 550 Bo/d
- Bean 5703 42-34H with 30 day IP of 298 Bo/d
- NJOS Federal 5602 11-13H 30 day IP of 375 Bo/d
- Sandaker 5602 11-13H with 30 day IP of 440 Bo/d
- Somerset 5602 12-17H with 30 day IP of 352 Bo/d
- NJOS 157-100-28A-33-1H with 30 day IP of 215 Bo/d
- NJOS 157-100-26B-35-1H with 30 day IP of 344 Bo/d
- Forseth 157-100-25B-1H with 30 day IP of 325 Bo/d
- Christensen 159-102-17-20-1H with 30 day IP of 326 Bo/d
GeoResources estimates its well economics on a 1280 acre unit in Williams County and in Montana could produce EURs of 350 to 500 Mboe. In Mountrail County there are expectations of EURs between 400 and 600 Mboe. It estimates wells will cost $7.5 to $8.5 million.
Triangle Petroleum (TPLM) has 72,000 net acres in the Bakken/Three Forks. Triangle would like to increase this position to 100000 net acres in the near future. 51000 net acres are operated. Its 21,000 net non-operated acres are mostly located in McKenzie County. Triangle expects EURs to average between 500 to 700 Mboe. It estimates well costs between $7.5 and $8 million. 30 day IP rates of 700 Boe/d are expected. Triangle believes payback can be achieved in less then 2 years. Much of this is the same as Brigham's estimates. Triangle also showing interest in Eco-Pad development like Continental (CLR). The same dual zone development potential of 4 Bakken and 4 Three Forks wells is also restated. I like Triangle from here, and believe it could have significant upside, if it can get decent production from its operated acres.
Credo Petroleum (CRED) has 7,000 net acres in the Bakken/Three Forks. This is located in the Fort Berthold Reservation. Credo plans to obtain resource from the middle Bakken and Three Forks formations. Other players in the area are:
Credo only has 7,000 net acres in the Bakken, which is small when compared to the company's 245,000 total net acres. Because of the area and expected results, Its Fort Berthold holdings could provide the most upside. I like Triangle much better as a spec play, but Credo looks good none the less.
Samson Oil and Gas (SSN) is a company that was an almost pure play on the DJ Basin in the Niobrara. On June 23rd this changed when Samson said it will purchase up to 90,000 net acres in the Montana Bakken. The leases will be purchased in three allotments, starting with two 20,000 acre purchases. If all variables are met, the third allotment of 50,000 acres will be purchased. Samson will maintain a 53.34 net revenue interest in all acquired acreage. Halliburton will be involved in all the stages of the wells in this area. This deal is much like earlier deals struck. Samson's stock moved significantly higher after the announcement of this purchase. Brigham has had very good results adjacent to Samson's new leasehold. It is nice to see Samson keeping its foot on the gas. The market had beaten up this stock as it did with most of the oil names. Even after this initial run up, I think Samson is still a good buy.
In summary, most of the companies in the Bakken have been very good about providing production estimates. EURs are one of the most important factors in valuing acreage. The main problem is that no one knows for sure what these numbers will be. The industry has an idea of what might happen, but cannot guarantee these numbers. It could take a few years until we know what Bakken/Three Forks wells will produce, but by that time we should see that better production, more locations, and decreased costs will improve the profitability of unconventional wells in the Williston Basin.
Disclosure: I am long BEXP, SSN.
Additional disclosure: This is a list of companies working the Bakken/Three Forks. It is just a list and not a buy recommendation. Large losses can be happen when investing in stocks. Companies linked to the price of commodities. Always study a stock before you invest. Source:Continental (CLR)Source:Oasis (OAS)Source:EOG Resources (EOG)Source: Credo Petroleum (CRED)Source: Triangle Petroleum (TPLM)Source: GeoResources (GEOI)Source: Samson Oil and Gas (SSN)