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:
|Well Name||IP Rate (BO/D)||30-day IP||60-day IP||90-day IP||Number of Stages||PSI||Choke||County|
|Pronghorn Federal 34-11TFH||1343||522||424||360||30||480||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|
|Mikes Creek 21-3TFH||126||82||100||100||29||250||32/64||Billings|
|Mikes Creek Federal 12-30TFH||816||249||225||237||22||325||34/64||Billings|
|Ellison Creek 11-7TFH||540||200||168||8||Billings|
|Total Well Average||1157||453||388||357|
|Bold Well Average||2096||766||644||562|
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.