Bakken Update: The Pronghorn Sand Could Be The Best Pay Zone In The Williston Basin

May.22.12 | About: Whiting Petroleum (WLL)

The Williston Basin is well known for its middle Bakken pay zone. It is the reason most people refer to this area as the Bakken with out realizing that it is a rock unit from the Late Devonian to the Early Mississippian age. It covers 200000 square miles of the Williston Basin. It is found in the subsurface of North Dakota, Montana and Saskatchewan. The Bakken formation was named for Henry Bakken, a farmer who owned the land from which it was first discovered. Below the middle Bakken are four separate layers or benches of the Three Forks. It is possible this group could have more recoverable resource than the middle Bakken, but the bottom three benches are still being tested.

In February of this year, Whiting (NYSE:WLL) started identifying the Pronghorn Sands in its Lewis and Clark and Pronghorn prospects. Initially I had wondered why Whiting had changed the name of the pay zone. The reason is clear now, as the Pronghorn has a much different geology. Whiting's Lewis and Clark Prospect was once thought of as a lesser portion of the play as the middle Bakken thins and is not economic. Whiting, Continental (NYSE:CLR), Occidental (NYSE:OXY), Fidelity (NYSE:MDU) and Chesapeake (NYSE:CHK) all have rigs in this area, and believe the Pronghorn could deliver very good returns.

Whiting has done a very good job of differentiating the Pronghorn. When compared to its Sanish Bakken wells, it has had similar returns. This is important as the middle Bakken reaches thicknesses of 90 feet in the Sanish Field. It is also one of the best producing areas of the Bakken other than Brigham's (NYSE:STO) Ross Prospect and Kodiak's (NYSE:KOG) Koala. There have been some large discrepancies in results as GMX Resources (GMXR) has not fared as well.

To give an idea of how Whiting's well production in the Pronghorn has been, I have listed its well results from the second half of 2011 to present:

Whiting's Pronghorn Wells From Q2 2011 To Present
Well Name IP Rate (BO/D) 30-day IP 60-day IP 90-day IP Number of Stages PSI Choke County
Praus 21-28TFH 391 210 158 146 30 320 31/64 Stark
Duletski 21-16TFH 707 385 310 277 22 2250 14/64 Stark
Binstock 21-30TFH 258 90 73 80 30 220 20/64 Stark
Marsh 21-16TFH-R 2503 770 623 518 30 520 48/64 Stark
Brueni 21-16TFH 802 387 359 303       Stark
Lydia 21-14TFH 1645 712 580 516 30 600 48/64 Stark
Mastel 41-18TFH 2805 1000 923 915 30 725 48/64 Stark
Talkington 21-30TFH 809 490 455 436 30 210 48/64 Stark
Pronghorn Federal 34-11TFH 1343 522 424 360 30 480 48/64 Billings
Smith 34-12TFH 2446 1133 996 876 30 875 48/64 Billings
Pronghorn Federal 21-14TFH 1606 513 436 366 30 560 48/64 Billings
DRS Federal 24-24TFH 2499 851 689 563 30 790 48/64 Billings
Demores Federal 31-10TFH 752 297 265 234 30 270 38/64 Billings
Schneider 12-12TFH 424 171 128 117 29 140 48/64 Billings
Mikes Creek 21-3TFH 126 82 100 100 29 250 32/64 Billings
Haystack 11-19TFH

342

86 117 121 30     Billings
Mikes Creek Federal 12-30TFH 816 249 225 237 22 325 34/64 Billings
Ellison Creek 11-7TFH 540 200 168   8     Billings
Clemens 34-9TFH 1919 630 480 384 30 544 48/64 Billings
Dietz 21-18TFH 741 291 250 243 30 400 18/64 Stark
Total Well Average 1157 453 388 357        
Bold Well Average 2096 766 644 562        
Click to enlarge

The wells located in north to northwest Stark, and just across the border to the west from Stark are all marked in bold. Also, there were a few wells in northwest Billings County as well. These are the specific areas Whiting has had success. Since June of 2011, it has drilled a significant number of wells in Billings and Stark counties. Some of these results have been quite good, but there have also been a large number of low producers. It does seem Whiting has begun to figure this area out, but I am unsure if this is due to its getting comfortable in the play, or geology. Last year it still believed it was targeting the upper Three Forks as designated with the TFH at the end of most of the wells listed. New wells will be labeled with a PH, to identify with the Pronghorn pay zone.

In summary, the Pronghorn could be better than the middle Bakken in Sanish Field. It currently looks as good as any area in the Williston Basin, and I would guess Whiting and other operators will figure out the Pronghorn and get consistent results about 1500 Bo/d. Given the number of Whiting wells in process, we could get a very good idea of how the play is progressing in the next quarter or two.

Disclosure: I am long KOG.

Additional disclosure: This is not a buy recommendation.