Seeking Alpha
Oil & gas, small-cap, growth at reasonable price, hedge fund analyst
Profile| Send Message|
( followers)  

Bakken Update: McKenzie County EURs Compared With Initial Production is an article concerned with IP rates for 2011. The reason I focused on 2011 was that the wells had been completed early enough to give a proper 90-day IP rate, but late enough to show a more current production number. I believe over half of the EURs in this county are too conservative, and here is why:

  • Increased lateral lengths
  • Increased number of stages
  • Increased proppant and sand used/well
  • Getting comfortable with geology of play
  • Directional drilling
  • Chemicals

I could make this list as long as this page, but it comes down to better drilling and completion techniques. Most oil exploration and production companies had discarded the notion of using 5000 foot laterals before 2010, but I included it because it is still being seen occasionally. The number of stages is a bigger reason.

Some of the biggest players in the Bakken were still using 24 stages last year, but the information I have seen seems to back 30 stages or more. Even though sand prices have increased significantly, this and proppant are both important to keep the oil flowing from the shale. These companies continue to get better results as it finds the best way to increase production. This not only includes current technologies, but newer more effective ones. Different frac fluid recepes such as those from Flotek (FTK), that are not only effective but also biodegradable.

Kodiak (KOG) had an average 90-day IP rate of 748 Bo/d in northeast McKenzie County (Poe Field), last year. To the southeast in 2010, Kodiak has wells with 24-hour and 90-day IP rates of:

  • Schilke 8-24H: 1060 Bo/d and 551 Bo/d
  • Wisness 21-34H: 271 Bo/d and 56 Bo/d
  • Sondrol 30-21H: 576 Bo/d and 366 Bo/d

Kodiak's 2010 average 90-day IP rate in northeast McKenzie County had an average of 324 Bo/d. If the Wisness well is removed due to its extreme underperformance this rate increases to 459 Bo/d. This is still a large discrepancy.

Enerplus (ERF) only had two well completions in northeast McKenzie county in each 2010 and 2011. In 2010, its wells had 24-hour and 90-day IP rates of:

  • Audrey Rabbithead Hall 33-11H: 593 Bo/d and 302 Bo/d
  • Red Tipped Arrow 33-11H: 205 Bo/d and 192 Bo/d

These two wells had an average 90-day IP rate of 247 Bo/d versus 422 Bo/d in 2011. Both the 2010 and 2011 results were half mile laterals.

Marathon's (MRO) 2010 results are:

  • Hunts Along USA 12-1H: 380 Bo/d and 228 Bo/d

Although there is only one result in northeast McKenzie County in 2010, it is well below Marathon's results in 2011 at 422 Bo/d.

Oasis' (OAS) has been seeing better initial production rates:

  • Angell 5200 31-28H: 2887 Bo/d and 540 Bo/d
  • Schmitz Federal 44-34H-2: 1704 Bo/d and 501 Bo/d
  • Missouri 5302 44-35H: 1999 Bo/d and 551 Bo/d

Its average northeast McKenzie County 90-day IP rate is 531 Bo/d. This is less than 2011 where Oasis averaged 574 Bo/d.

Continental (CLR) has had a busy 2010.

  • Ravin 1-1H: 380 Bo/d and 267 Bo/d
  • Bailey 1-24H: 406 Bo/d and 334 Bo/d
  • Olson 2-8H: 1219 Bo/d and 464 Bo/d
  • Kennedy 1-31H: 378 Bo/d and 433 Bo/d
  • Miles 2-6H: 800 Bo/d and 307 Bo/d
  • Miles 1-6H: 161 Bo/d and 110 Bo/d
  • Kennedy 2X-31H: 836 Bo/d and 337 Bo/d
  • Rolfsrud 1-11H: 494 Bo/d and 520 Bo/d
  • Stortroen 1-13H: 558 Bo/d and 301 Bo/d
  • Shafer 1-21H: 183 Bo/d and 289 Bo/d
  • Muri 1-27H: 364 Bo/d and 282 Bo/d
  • Sandie 1-28H: 441 Bo/d and 307 Bo/d
  • Mack 2-2H: 609 Bo/d and 363 Bo/d
  • Rollefstad 2-3H: 674 Bo/d and 353 Bo/d
  • Lansing 1-25H: 76 Bo/d and 399 Bo/d
  • Simmental 2-21H: 275 Bo/d and 391 Bo/d
  • Bohmbach 2-35H: 428 Bo/d and 375 Bo/d
  • Hendrickson 2-36H: 668 Bo/d and 560 Bo/d

The average 90-day IP rate for Continental in northeast McKenzie County for 2010 was 355 Bo/d. This compares to its 2011 average of 448 Bo/d. The information contained in this article does show a marked increase in 90-day IP rates from 2010 to 2011. As these numbers continue to improve so will EURs.

Disclaimer: This is an article on Bakken IP rate improvements from 2010 in northeast McKenzie County to 2011. It is not a buy recommendation.

Source: Bakken Update: McKenzie County Production Year-Over-Year