Bakken Update: McKenzie County EURs Compared With Initial Production

by: Michael Filloon

Analyzing well locations can be a daunting task. There are so many variables that can have an effect on the total resource in either a positive or negative fashion. My last two articles studied estimated ultimate recoveries (EURs). EURs are found by taking initial production (IP) rates over a period of time, and modeling that production to figure the total recovered resource from a well site. IP rates can vary depending on the length of time used. 30-day, 60-day or 90-day IP rates can be used, but keep in mind the longer the time interval, the better it measures EURs. Also, EURs are just an educated guess, but it is the best metric for determining the total resource recovery.
In "Bakken Update: Williston Basin Estimated Ultimate Recoveries And What They Tell Us," I listed EURs as determined by the oil producers in those specific areas. This list provided a focus area with respect to what I call the Bakken "sweet spot." This area based on EURs, is the best Williston Basin acreage:

  1. Southwest Mountrail County
  2. Northeast McKenzie County
  3. Northeast Dunn County

The best areas seem to be to the east, west and south of the Nesson Anticline. It seems the closer a location is to the anticline, the better the production and EURs. This has been seen in some of the Bakken fields to the east of this area. These fields are:

  1. Alger Field
  2. Ross Field
  3. Sanish Field
  4. Parshall Field

It could be argued that the differences in initial production have to do with the operator in that field and not as much about the location of acreage. This is unlikely given the results from one area to the other. Alger Field has been the best field in the Williston Basin, with the majority of development coming from Brigham (NYSE:STO). Keep in mind, Kodiak's (KOG) Koala wells are better producers given its 90-day IP rates., but the field has not been developed enough to know for sure. Listing these fields in order based on IP rates, Alger has had the best production, followed by Ross, Sanish and Parshall fields. Three prior articles of mine have addressed these production differences: "The 3 Best Oil Fields In The Bakken And The Stocks That Are Capitalizing Part I"; "The 3 Best Oil Fields In The Bakken And The Stocks That Are Capitalizing Part II"; "The 3 Best Oil Fields In The Bakken And The Stocks That Are Capitalizing Part III."

The numbers with in these articles confirm where the best production in the Bakken has been. Alger Field has had very good production, but Kodiak's Koala wells have been even better. Because of this, I will take the EURs from these two areas, and break those numbers down into IP rates.

The EURs for northeast McKenzie County are:

  1. Kodiak's Koala: 800-900 Mboe
  2. Enerplus' (ERF) Fort Berthold: 600-800 Mboe
  3. Linn Energy's (LINE) Westberg: 500 Mboe Non-operator
  4. Whiting's (WLL) Tarpon: 900 Mboe

As I said earlier, EURs are substantiated through IP rates. The best way to identify this is to compare an oil producer's 90 day-IP rates to its estimated ultimate recovery. By taking these 90-day IP rates using only wells completed in 2011, I will show the how these rates influence EURs.

Kodiak has had excellent numbers in northeast McKenzie County. These results are arguably the best results in the Williston Basin:

  1. Koala 9-5-6-12H3: 645 Bo/d (90-day)
  2. Koala 9-5-6-5H: 797 Bo/d
  3. Koala 3-2-11-14H: 845 Bo/d
  4. Koala 3-2-11-13H: 708 Bo/d

Kodiak's results include three middle Bakken and one upper Three Forks wells. Results from Enerplus have been encouraging:

  1. Danks 17-44H: 377 Bo/d-640 acre lateral
  2. Danks 20-41H: 468 Bo/d-640 acre lateral

Results from Whiting are:

  1. Johnson 31-4H: 299 Bo/d
  2. Rovelstad 21-13H: 431 Bo/d
  3. Arnegard 21-26H: 434 Bo/d

Marathon's (NYSE:MRO) results:

  1. Danks USA 11-3H: 696 Bo/d
  2. Crow Flies High USA 31-4H: 551 Bo/d
  3. Jones USA 14-14H: 508 Bo/d
  4. TAT USA 13-23H: 110 Bo/d
  5. TAT USA 34-22H: 445 Bo/d
  6. Goodall USA 11-29H: 357 Bo/d
  7. Quale USA 31-20H: 229 Bo/d
  8. Debbie Baklenko USA 12-26H: 366 Bo/d
  9. Windy Boy USA 12-35H: 540 Bo/d

Oasis' (NYSE:OAS) McKenzie County results:

  1. Hystad 5200 44-19H: 461 Bo/d
  2. Sparrow Federal 5201 42-11H: 706 Bo/d
  3. Wade Federal 5300 21-30H: 557 Bo/d

Continental (NYSE:CLR) Resources results:

  1. Calhoun 1-3H: 610 Bo/d
  2. Norway 1-5H: 348 Bo/d
  3. Vardon 1-14H: 756 Bo/d
  4. Nordeng 1-8H: 502 Bo/d
  5. Sivertson 1-9H: 273 Bo/d
  6. HE 1-20H: 504 Bo/d
  7. Don 1-23H: 583 Bo/d
  8. Ivan 1-29H: 435 Bo/d
  9. Norfolk 1-1H: 451 Bo/d
  10. Wahpeton 1-16H: 147 Bo/d
  11. Pittsburgh 1-19H: 619 Bo/d
  12. Charlotte 1-22H: 524 Bo/d
  13. Steele 1-24H: 510 Bo/d
  14. Chicago 1-26H: 416 Bo/d
  15. Akron 1-27H: 387 Bo/d
  16. Kuhn 1-12H: 523 Bo/d
  17. Missoula 1-21H: 311 Bo/d
  18. Seattle 1-35H: 286 Bo/d
  19. Buelingo 1-20H: 335 Bo/d

Taking these northeast McKenzie County results, and averaging them by producer will help to show an overall production rate for this area.

  1. Kodiak: 748 Bo/d
  2. Enerplus: 422 Bo/d half mile laterals
  3. Whiting: 388 Bo/d
  4. Marathon: 422 Bo/d
  5. Oasis: 574 Bo/d
  6. Continental: 448 Bo/d

Other than Kodiak, these numbers seem to average out somewhat with time. The most impressive is Continental's 90-day IP rate. Of all the companies mentioned, Continental had lowest average 24-hour IP rate. Because this company chokes back production, its production rates can be misleading.

As a final note, my advise would be to concentrate on some of the better production numbers. Continental recently stated it would be increasing the number of stages from an average of 24.5 to 30. Oasis has also stated it believes wells will be more profitable through an increase of stages. Lastly, there have been several companies working on laterals four-sections long. There have not been enough results, to show if results are improving with this, but time will tell. The better numbers from this grouping are a sign of things to come. If companies can produce 600 to 800 barrels of oil per day for 90 days in just one well, these companies will be able to repeat these results. I am very optimistic given the improvements in longer-term IP rates in just one year.

Disclosure: I am long OAS, KOG.

Disclaimer: This is an article on initial production rates in northeast McKenzie County. It is not a buy recommendation.