Bakken Update: The Three Forks Has Huge Potential

by: Michael Filloon

Interest in the Eagle Ford has increased since the beginning of last year. Some believe it outperforms all other plays in the United States, including the Bakken/Three Forks. Comparing one play to another can be difficult, if not impossible, given shale differences. Acquiring proper knowledge of these differences can take years of study, as there are many variables to address. It is my belief, the Eagle Ford and Williston Basin are much closer on a productive basis, if the entire Three Forks formation is used in this comparison. The Three Forks differs in thickness significantly from one county to the next, so I will try to cover as many areas as possible in this basin.

The Bakken/Three Forks are two different pay zones in the Williston Basin. The reason I use both, is the upper Three Forks has significant resource, and possibly much more than current estimates. Plus it is important to remember the additional locations afforded by the Three Forks.

Image Detail

The illustration above shows the thickness of the middle Bakken shale. The darkest color represents thicknesses greater than 120 feet. Western Mountrail County is the thickest by far, and would stand to reason giving Brigham's [STO] Ross Field has produced some of the best results in the play. It also shows why 10 to 12 well pads are popping up in this area. This difference in geology coupled with internal pressure, kerogen content, maturity and rock content all contribute to how good a shale play can be.

The Three Forks is composed of four benches or layers. The upper Three Forks, or the first bench of the Three Forks has had good results, and is commercial throughout a good portion of the Williston Basin. The thinnest portion of the upper Three Forks is in the northwest portion of the Williston Basin in Montana. It thickens significantly to the east and south. There have been good upper Three Forks results in Roosevelt County, but it is difficult to know the number of wells per 640 acre spacing this area will permit.

The upper Three Forks had a commercial result in western Williams County by Continental (CLR). Obert 1-13H, in Hebron field had an IP rate of 896 Boe/d. Keep in mind, Continental chokes back production initially to keep pressures high longer, and this produces lower IP rates. Brigham has had two very good upper Three Forks results in its Roughrider prospect. Its most northern well of this group is Irgens 27-34#2H, which had an IP rate of 2906 Boe/d. The second well is a little further south. State 36-1#2H had an IP rate of 2356 Boe/d. Tracker completed a well in south central Williams County just north of McKenzie County. Scanlan 17-1TH had an IP rate of 1781 Boe/d.

Kodiak (KOG) followed this with two very good upper Three Forks wells in its Koala prospect. Koala 9-5-6-12H3 had an IP rate of 2327 Boe/d. Its second well, Koala 2-25-36-16H3 had an IP rate of 2844 Boe/d. Denbury (DNR) had a completion to the east of Koala. Satter 31-1SWH had an IP rate of 1715 Boe/d. Further to the northeast in McKenzie County, Abraxas (AXAS) had a good upper Three Forks completion. This well produced 1008 Bo/d, and 1342 Mcf in the first 24 hours.

Brigham's Ross prospect also produced an upper Three Forks result in Mountrail County. Holm 9-4#2H had an IP rate of 2196 Boe/d. Also in Mountrail County, Fidelity [MDU] produced 804 Boe/d from Lori 18-19H in the Three Forks, plus Helen 11-15H-22 which produced 708 Boe/d. These upper Three Forks results, in Stanley field from Fidelity, were less than have the IP rate of middle Bakken wells nearby. Brigham's Liffrig 29-20#1H produced an IP rate of 2477 Boe/d. In northeast Dunn County, Kodiak has had a couple of very good well results from the upper Three Forks. SC 12-10-11-9H3 had an IP rate of 2982 Boe/d, and SC 2-8-17-14H3 was 2680 Boe/d.

The further north in Williams County, the thinner the upper Three Forks is. Baytex (BTE) has acreage in Divide County, and on page 33 of its most recent presentation, it shows this, but also states there are more possible locations below the first bench. SM Energy's (SM) acreage in Divide County (Gooseneck Prospect) has EURs of 365 MBoe on 320 acre spacing. This compares to its Raven prospect that has an EUR of 409 MBoe. Raven is located in north central McKenzie County. Middle Bakken EURs are 498 MBoe or approximately 18% better than the first bench. In northeast McKenzie County is its Bear Den prospect. This area has middle Bakken EURs of 554 MBoe and 447 MBoe in the upper Three Forks. The reason I use this as a guide is the same producer will remove a variable and give a more consistent comparison between these two pay zones. Magnum Hunter (MHR) is also in Divide County and has almost exclusively drilled the Three Forks. Results have improved significantly, and its most recent well Thomte 8-5-163-99 had an IP rate of 1309 Boe/d. More impressive is its location as it is just a few miles from the Canadian border. This well is a 30 stage frac, which is four more stages than its previous wells.

South McKenzie County has had some middle Bakken success, but nothing like the northern part of the county. The upper Three Forks would seem to improve to the south and east, creating opportunities in south east McKenzie and southwest Dunn counties. The upper Three Forks thickens further into northern Billings and western Stark counties. Whiting (WLL) is very active in this part of the Williston Basin. It has 118000 net acres and of its 44 wells in the Lewis & Clark, it has an average IP rate of 1312 Boe/d. Whiting has had very good results in northern Billings County. Dry Creek 44-20TFH had an IP rate of 2337 Boe/d. Its Clemens 34-9TFH had an IP rate of 2108 Boe/d. Whiting is also active in northwest Stark and its Hecker 21-18TFH had an IP rate of 3612 Boe/d. Fidelity is working acreage to the east of Whiting. This area is a few miles west of Dickinson. Kostelecky 31-6H had an IP rate of 1343 Boe/d.

There are several oil producers working the fringe of the upper Three Forks. The truth is we are unsure how far south it will be productive as it extends into South Dakota. Continental has also been targeting the second bench of the Three Forks. Of the test wells drilled, it has stated the second bench has been consistent throughout the basin. Its Charlotte 2-22H was a very good result, and proved the second bench can be economic. If the second bench is much like the first, there could be at least four additional locations/pad. Four locations are used in this example because it is the Three Forks average in the better parts of the play. It is very possible (and likely) that areas like Alger Field, where Hess (HES) has planned its first twelve well pad, that an additional six locations could be possible in the best areas. This would equal 36 acre spacing without any wells in the third or fourth bench.

In summary, the Three Forks could be a bigger story than the middle Bakken. At its thickest point it is 270 feet thick, compared to the middle Bakken at 90 feet. This does not mean the Three Forks will produce three times the resource, but in some areas, we could see significantly more than is currently estimated. It would not surprise me if the second bench can produce at least four locations/pad. It is possible the third and fourth bench can be completed with the same lateral, but we do not have enough information to confirm at this time. EOG Resources is currently conducting a secondary recovery of the Bakken. I feel this is also very important, and could also improve production, increasing value in the Bakken. Other possible targets outlined by Brigham are:

  1. Red River
  2. Heath/Tyler
  3. Ratcliffe
  4. Mission Canyon
  5. Lodgepole
  6. Nisku
  7. Duperow
  8. Winnepeg
  9. Deadwood

It would be interesting to see how the middle Bakken and four Three Forks pay zones would compare to the Eagle Ford in the condensate and oil windows from the Maverick Basin to Lee County.

Disclosure: I am long (KOG).

Disclaimer: This is an overview of the Three Forks Formation and is not a buy recommendation.