Bakken Update: Newfield May Be One Of The Top Bakken Operators In 2012

Jul.15.12 | About: Newfield Exploration (NFX)

I recently reported that Brigham's (STO) well design was one of the best in the Bakken. At one point, Brigham had nine of the top ten IP rates in the Williston Basin. This was the case until Newfield (NFX) provided some very good numbers of its own. Newfield has done this with a well design close to that of Kodiak (KOG) or Exxon (XOM) dba XTO Energy. Newfield is not only a good operator, its acreage is in what may be the best area in North Dakota. Much of its acreage is in northeast McKenzie County, which I believe not only has a very good middle Bakken but also upper Three Forks. The Three Forks is comprised of up to four benches throughout the Williston Basin. There have been at least two successful wells drilled and completed in the second bench of northeast McKenzie County. One of these wells were operated by Continental (CLR) and the other Burlington (COP). The third and fourth bench of the Three Forks is not as consistent, but has promise in this area. What this means is the middle Bakken, which is 90 feet thick in some areas, and the Three Forks which is up to 270, could produce 16 wells. Currently most areas are only de-risked for 8 wells.

Another reason to be optimistic about Newfield's Bakken acreage, has to do with Whiting (WLL) which I covered recently in this article. Tarpon Federal 21-4H is the best well to date in the Bakken with respect to is IP rate. This was done with a 52/64 choke, and produced approximately 70000 barrels of oil in the first 50 days. There was something special about this area, as Whiting didn't use an extraordinary number of stages (30), or what would be considered a very large amount of water or proppant. This well was only a couple of miles from Newfield's acreage in Westberg Field. Because of this, I have compiled a number of wells in northeast McKenzie for the purpose of identifying some of Newfield's better completions.

Newfield's 2011 Northeast McKenzie County Results
Name Date Choke Stages Water Proppant 60Day IP 120Day IP
Drovdal 150-99-8-5-1H 6/11 34/64 32 69739 3806141 864 629
Wisness Federal 152-96-4-2H* 7/11 36/64 26 38560 2228638 1117 897
Lawlar 151-98-31-30-1H 7/11 36/64 38 82912 3976810 798 561
Hoffman 150-98-18-19-1H 8/11 36/64 31 52755 3143246 774 580
Holm 150-99-13-24-1H 8/11 36/64 38 68932 4052700 741 577
Click to enlarge

In the wells above there are some very good results. The Wisness Federal well is even more impressive given it is a short lateral. Given the amount of water, proppant and stages well costs are high, but given the IP rates its seems it is headed in the right direction. More important about Wisness Federal is this 26 stage well could help to prove we will continue to see increased stages. Some believe 38 to 40 stage long laterals may provide the best stimulation of a pay zone when costs are considered. This is only a guess, but we could continue to see increased stages upwards to 50 on two mile laterals. The only question at that point is how much water and proppant will a well of this magnitude need. Newfield uses an average choke size not much different from Kodiak and Exxon. This choke is tighter than Whiting, but more free flowing than Continental. In the table below I will cover Newfield's 2012 completions.

Newfield's 2012 Northeast McKenzie County Results
Name Date Choke Stages Water Proppant IP Rate
Wehrung 150-99-11-2-1H 1/12 24/64 23 42300 2491000 60Day=576
Bernice 150-99-20-17-1H 1/12 18/64 32 68580 4000000 60Day=602
Charlotte 158-98-17-20-2H 3/12 48/64 30 59091 3726388 60Day=634
Sand Creek State 1-16H 1/12 18/64 24 36550 1923000 60Day=663
Garvey Federal 153-96-29-2H 3/12 18/64 24 36150 1780000 60Day=521
Click to enlarge

The 2012 results have been interesting. All of the wells have been good, but Newfield is doing more short laterals and getting very good results. The three wells completed with 23 or 24 stages are short laterals, while those completed with 30 or more stages are long. Newfield continues to be one of the Bakken leaders with the drill bit. It would seem costs will continue to be in the $10.5 to $11.5 million range, but hopefully the decrease in natural gas drilling in the United States will continue to free up the schedules of companies doing completions. If these costs can pull back some it would help significantly. Right now I believe the best completions are being done with an average choke (36/64), 35000 barrels of water, and 2000000 pounds of proppant per mile. Some of these figures may be off some as I have focused on better areas in the Bakken and design may differ significantly in an area like western Williams County.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: IP rates are listed in barrels of oil per dayWater volumes are measured in barrelsProppant is measured in poundsThis is not a buy recommendation.