The article "Q4 Production Update For The Bakken," noted some concern about Kodiak's (KOG) most recent production numbers. Not only had wells come in under expectations, but there were also problems with completions.
I would like to make a point to say that Kodiak is in my opinion a very well run company with excellent acreage. I could even say it has the best Bakken acreage as its northeast McKenzie and southeast Williams (and non-operated Dunn County) make up a very large percentage of its acreage as a whole. This area has had very good well results from Brigham (NYSE:STO), Newfield (NYSE:NFX), Denbury (NYSE:DNR), and Kodiak. Here are some fourth-quarter of 2011 wells in the general area of Kodiak's Koala (McKenzie County) and Polar (Williams County) prospects. Of record Newfield only completed one well in the fourth quarter. Keep in mind Newfield has pulled back in the Bakken because of increased costs. Syverson 150-99-36-25-1H had an initial production (IP) of 2301 Bo/d. In the first 88 days this well produced 61779 barrels of oil. It is approximately 14 miles from Kodiak's Koala wells in Poe Field.
Brigham's (pdf) [now owned by Statoil] results in this area have also been good. In Banks Field, which is about 8 miles from Poe Field, two wells were completed:
- Enderud 9-4 1-H: IP rate of 2879 Bo/d. It produced 72660 barrels of oil in the first 87 days.
- Topaz 20-17 #1H: IP rate of 2575 Bo/d. It produced 22905 barrels of oil in the first 25 days.
Brigham also had two completions in Todd Field (Williams County), which is a few miles west of Kodiak's Polar Prospect:
- Williston Airport 2-11 1-H: IP rate of 2671 Bo/d. It produced 55954 barrels of oil in the first 79 days.
- Field 18-19 3H: IP rate of 2173 Bo/d. It produced 27289 barrels of oil in the first 70 days.
Denbury is active in Siverston Field, which is a few miles southeast of Poe Field:
- Rolfson 11-16NEH: IP rate of 1849 Bo/d. It produced 36568 barrels of oil in the first 80 days.
- Rolfson 21-16SEH: IP rate of 1411 Bo/d. It produced 35817 barrels of oil in the first 73 days.
Denbury also has completed wells in Tobacco Garden Field. This field shares the eastern border of Poe Field:
- Loomer 24-34NEH: IP rate of 165 Bo/d. It produced 4012 barrels of oil in the first 67 days.
- Loomer 24-34SEH: IP rate of 1481 Bo/d. It produced 23272 barrels of oil in the first 80 days.
The Loomer 24-34NEH well had some definite problems. Historically, Denbury's results have not been as good as others in this area. Some of this can be attributed to its use of 24 to 26 stages on 1280 acre spacing. Brigham and Newfield have generally used 30+ stages, and have derived much better IP rates from 24-hour and 90-day stand points. For Denbury, these results are very good.
Continental (NYSE:CLR) also had a very good completion in North Tobacco Garden Field. This well is about six miles east of Poe Field. Durham 1-2H had an IP rate (including both oil and gas) of 2003 Boe/d. This result is not only important due to its location, but also for who the well belongs to. Continental has historically had much lower IP rates than its competition, as it chokes off production more in the hopes the well will produce more in the longer term. It has also averaged 24.5 stages per well, and is now starting to move to 30+ stage wells. Durham is still on confidential status, so we will have to wait for more specific information.
In summary, northeast McKenzie and southeast Williams counties are showing very good fourth-quarter results. Even with Kodiak's recent completion problems, it still has on a per-acre basis, the best Bakken/Three Forks acreage in the Williston Basin. Keep in mind this is just an estimate, and there is no way to know how some of these wells will deplete with certainty. My advice would be to break down results into general areas and pay specific attention to the amount of oil produced over a time frame. Brigham's Enderud well seems to be the best in this quarter. It will be interesting to see how it stacks up against Kodiak's Koala completions.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: This is an article on fourth quarter of 2011 well results in and around the Koala and Polar prospects of Kodiak Oil and Gas. It is not a buy recommendation.