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The third quarter had some very good results by producers active in the Williston Basin. The main story is focused around Twin Valley Field, where Whiting (NYSE:WLL) had an IP rate of 7000+ Boe/d. Kodiak (NYSE:KOG) and Newfield (NYSE:NFX) have also had very good results (or at least much better than expected). Continental (NYSE:CLR) now believes the second bench of the Three Forks could be commercial throughout the Bakken, and it is possible the third and fourth bench could be viable in spots.

To the west of Kodiak's Koala wells is Oasis (NYSE:OAS). This acreage seems to have similar upside. Oasis could have the best overall acreage in the Bakken, when its size and the number of acres are taken into consideration. There was a time before Brigham (BEXP) was purchased, that Oasis was thought by some as a company with acreage as good, with its shortcomings blamed on operational issues. Oasis has met earnings expectations for three straight quarters since a bad miss in the December of 2010 quarter. Much of this miss had to do with its starting a well service company. Since then, Oasis has made some significant improvements to infrastructure and costs. Gas production was increased significantly as Oasis hooked up additional wells to its gas infrastructure. Although it has lagged other Bakken players, Oasis has begun to use a 36 stage completion, which has stimulated 20% to 30% better well production. Each stage costs approximately $120000. It is also getting wells connected to its oil gathering system. This decreases costs by $4/barrel when compared with trucking oil from the well site. It is further decreasing costs through its salt water disposal system. This was 28% of costs in the first half of this year. Oasis estimates its middle Bakken wells will cost $8.5 million for an all sand well, and $9.2 to $9.4 million with a proppant/sand mix. It believes well costs will decrease by 10% in 2013. Oasis has tested 100% sand wells versus a mixture of proppant/sand and it believes this does not sacrifice performance. Oasis' well service company will save an estimated $16 to $20 million on average per year.

Oasis has seen improvements with respect to initial production in 2011. Wells completed this year have IP rates of:

  1. Ruud 5493 42-23H: 1592 Bo/d
  2. Cowden 5404 13-35H: 1752 Bo/d
  3. Hendricks 5602 42-36H: 1211 Bo/d
  4. Hagen 5792 44-31H: 1685 Bo/d

This is just a sample of some of its best wells for Oasis, in 2011. Oasis has seen much better production rates with changes it has made to its completions. The main area to watch for Oasis is its Indian Hills acreage. It is possible that Oasis could have finally turned things around. This company has worked hard to get costs down while improving production.

Denbury (NYSE:DNR) is known for its EOR production, but has left its mark as a Bakken producer. In the third quarter it increased this production 31% quarter over quarter. It averaged a little less than 10000 Boe/d. Denbury stated it saw differentials in the Bakken improve by $4. This company has done a very good job of executing here and has increased its rig count from five to seven. Denbury has seen drill times decrease significantly from 59 days in the first quarter to 33 in the third. More importantly, the changes in drilling and completions have produced significantly better IP rates.

Denbury has 65000 net acres in its Almond area acreage. It drilled an Almond test well in October and found it wasn't commercial. Denbury cancelled the second well in Almond and looks to focus on other areas of its Williston Basin acreage. Since the Almond is not commercial in the third quarter this company had average IP rates of 2197 Boe/d versus the second quarter's rates of 1496 Boe/d. Two of Denbury's focus areas are very important. The first is Cherry, which is in the same area as Whiting's Hidden Beach acreage. The second is Charlson, and is in the same area as Whiting's Tarpon prospect. In both of these prospects, Whiting has shown a much thicker pay zone in both the middle Bakken and upper Three Forks. Charlson in particular has value as Continental has shown all four benches of the Three Forks could be commercial in this area. Kodiak has shown its Koala wells to the west are better than Brigham's with respect to the 60 day IP rate. The Cherry area wells had an average IP rate between 2414 and 2694 Boe/d. Denbury's Bakken wells have been a pleasant surprise. It has had success in McKenzie County like Kodiak, Whiting, Newfield and Continental. It attributed better results to small changes in well design such as the amount of sand or proppant, as Denbury is still using a much lower number of stage range from 16 to 24 with long laterals. Denbury states its Bakken wells have costs of $9.6 million, but recent wells that had problems saw costs increase to $10.4 million. At the end of the quarter, this company expects its average well cost at $9.4 million, but lowers it to $9 million if twin wells are drilled.

Denbury's well results have been very interesting. It has very good completions, and is doing this with a very low amount of stages. Here are some of Denbury's 2011 producing wells:

  1. Sand Creek 21-10SH: 1939 Boe/d (24 stages)
  2. Lundin 11-15SEH: 2252 Boe/d (30 stages)
  3. Thompson 31-11SWH: 1501 Boe/d (16 stage short lateral)
  4. Thompson 31-11NWH: 1605 Boe/d (12 stage short lateral)
  5. Franchuk 34-19SWH: 2006 Boe/d (23 stages)
  6. Franchuk 34-19NWH: 1957 Boe/d (23 stages)

In summary, it is possible that Denbury has increased its IP rates based on small changes in completion. I believe it has more to do with its acreage. By this I mean Denbury has very good acreage. Ten of its twenty wells were drilled in Cherry. An additional four wells are in Charlson. Even with a lower number of stages, these wells have performed adequately. The biggest problem with the lower number of stages is production rates in the 60- to 90-day range. These wells have good initial (24 hour) production, but decline much faster. Its Thompson wells are just an approximate 8 miles from Whiting's Twin Valley well that produced the highest IP rate in the Bakken/Three Forks. Its Franchuk wells are just to the southwest of the Fort Berthold Reservation. This in my opinion is the reason for Denbury's outperformance. It would be my guess that we will see increased stages like other experienced players in this basin.

Both Oasis and Denbury have made great strides in the third quarter. Oasis has managed to decrease costs and position itself for another North Dakota winter. Both Oasis and Denbury have increased IP rates and seem to be figuring the Bakken shale, but I would expect both players will be able to continue these improvements.

Disclosure: I am long KOG.

Disclaimer: This is an overview of OAS and DNR in the third quarter of 2011. This is not a buy recommendation.