As an investor it can be difficult to know which stock in a particular play has the most upside. Whether its the Wolfcamp, Marcellus, Eagle Ford or Williston Basin Bakken it all comes down to location. Some operators are ahead of the curve like Brigham (BEXP) in the Bakken and EOG Resources (NYSE:EOG) in the Eagle Ford. With time other operators will get comfortable in these plays and see initial production rates improve. With reference to the Williston Basin Bakken/Three Forks Sanish, Mountrail County has outperformed not only Montana but North Dakota as well. The success in this county has provided a rapid development as Brigham, EOG Resources and Whiting (NYSE:WLL) have been busy developing this area.
Brigham is known as a Williston Basin outperformer, but much of this has to do with its acreage. It has been defined by its 35200 net acres in Ross. Ross is located in Mountrail County, North Dakota and is roughly 43 miles northwest of Parshall. Brigham has significant upside in Ross. Brigham estimates 220 well locations here using 4 Three Forks and 3 middle Bakken wells/1280 acre spacing. It has 27 wells completed leaving 193 uncompleted locations. Of the 27 completed wells, 21 long laterals in Ross have an average IP rate of 3228 Boe/d. This is much better than its Rough Rider results, as its 58 long laterals have averaged 2650 Boe/d.
Of the 17 current long lateral middle Bakken wells Brigham has had an average 30 day IP rate of 1405 Boe/d. This means the average Ross middle Bakken well will have an EUR of roughly 850 MBoe. Brigham has 30 day IP results from the Three Forks in two separate Ross wells that averaged 1035 Boe/d. Its EURs are between 500 Mboe and 700 MBoe. The most important aspect of this play is not EURs, but locations. Brigham believes it may be able to drill 5.5 middle Bakken and 5.5 Three Forks wells/1280 acre unit, and would be an increase of 3 total wells from old estimates. Current Ross producing wells are:
- Brown 30-19: IP rate of 3309 Boe/d
- Wright 4-33: IP rate of 3360 Boe/d
- Esther Hynek: IP rate of 1904 Boe/d
- Roger Sorenson 8-5: IP rate of 2658 Boe/d
- Jack Cvancara 19-18: IP rate of 5305 Boe/d
- Domaskin 30-31: IP rate of 4675 Boe/d
- Cvancara 20-17: IP rate of 4402 Boe/d
- Sorenson 29-32 #2H: IP rate of 5330 Boe/d
- Sorenson 29-32 #1H: IP rate of 5133 Boe/d
- Clifford Bakke 26-35: IP rate of 5061 Boe/d
- Arvid Anderson 14-11: IP rate of 3191 Boe/d
- SCHA 33-34: IP rate of 2974 Boe/d
- Hospital 31-36: IP rate of 1449 Boe/d
- Vachal 3-34: IP rate of 3800 boe/d
The five IP rates in bold are all in the top ten highest production rates in the Williston Basin. Again, this shows the importance of location, as half of the top ten are located in one field. Brigham also has acreage in the Parshall/Austin/Sanish area. These areas are dominated by EOG and Whiting, but Brigham still has 7350 net acres. Adding Brigham's Ross acreage to its Parshall/Austin/Sanish gives a total of 42550 net acres. This provides 265 of its 874 core development well locations, and this is without figuring the additional 3 locations per 1280 acre spacing due to density drilling. Brigham is currently testing its Ross and Rough Rider areas to see if its 5.5 density drilling pilot is commercial.
EOG Resources recently released two well results from its Parshall Field acreage. It has a significant core acreage in Mountrail County. Fertile 19-29H had an IP rate of 1008 Bo/d, while Fertile 45-29H produced 1223 Bo/d. Whiting is also in the Parshall Field with 17846 net acres. It also has a very large leasehold the Sanish Field with 65056 net acres. Whiting has 229 producing wells in the Sanish and 127 in the Parshall Field. In 2011, Whiting completed 21 Bakken Sanish wells. It had initial production rates of:
- 24 hour IP rate: 2020 Boe/d
- 30 day IP rate: 694 Boe/d (18 wells)
- 60 day IP rate: 607 Boe/d (12 wells)
- 90 day IP rate: 545 Boe/d (8 wells)
Whiting's Sanish Three Forks wells had initial production rates of:
- 24 hour IP rate: 868 Boe/d (10 wells)
- 30 day IP rate: 502 Boe/d (2 wells)
- 60 day IP rate: 395 Boe/d (2 wells)
Recent new Whiting Sanish wells:
- Vangen 44-3 TFH: IP rate of 1338 Boe/d
- Brookbank State 41-16XH: IP rate of 2835 Boe/d
- Oppeboen 14-5WH: IP rate of 2294 Boe/d
- Nesheim 11-24XH: IP rate 3752 Boe/d
Whiting believes it has significant resources in its Sanish Bakken and Three Forks locations:
- Bakken locations have approximately 16-23 MMBoe/1280 acre unit.
- 8%-12% of 16-23 MMBoe is recoverable.
- Three Forks locations have approximately 12-16 MMBoe/1280 acre unit.
- Three Forks recovery of 7%-10% of 12-16 MMBoe/1280 acre unit.
At this point Mountrail is the best producing county in North Dakota. For July of this year, the top ten oil producing counties in North Dakota are:
- Mountrail: 3962989 barrels of oil
- McKenzie: 2343335 barrels of oil
- Dunn: 1778820 barrels of oil
- Williams: 1632474 barrels of oil
- Bowman: 805548 barrels of oil
- Divide: 350131 barrels of oil
- Billings: 294557 barrels of oil
- Burke: 179999 barrels of oil
- Bottineau: 153177 barrels of oil
- Stark: 135932 barrels of oil
What initial production does not tell us with certainty is the ultimate recovery of the wells in Mountrail County. Estimates have been made, but only time will tell. In the early 80's, I remember sitting in elementary school as our teacher told us of all the oil locked in rock formations deep below the surface in our state. We were told the Bakken shale would produce very little oil as it was impossible to recover this oil. On 6-20-08, Whiting drilled Behr 11-34H. This Sanish Bakken well was a ten stage frac and had cumulative production of 719046 barrels of oil and 420271 Mcf of gas as of 6-30-11. This gives an idea of the upside to these wells given the new technologies.
In summary, Mountrail County, North Dakota is the focal point of Williston Basin oil production. Given the changes in technologies that have increased IP rates and EURs, there is still upside to production from these wells. Location estimates are also increasing in a play that not to long ago was estimating 2 middle Bakken and 2 Three Forks wells/1280 acre unit. Look for density drilling, pad drilling, zipper fracs and sliding sleeves to continue to decrease costs while increasing production. If Whiting is right about original oil in place being 16 to 23 MMBoe/Sanish Bakken well, and recoveries between 8% and 12%, we could see ultimate recoveries between 1.28 million and 2.76 million Boe per well.
Disclosure: I am long BEXP.
Additional disclosure: This is a list of companies with large operated positions on Mountrail County. It is only a list and not a buy recommendation.