Bakken Update: Oasis' IP Rates Are Increasing Using 36 Stage Fracs

| About: Oasis Petroleum (OAS)

Brigham (STO) has made a name for Alger and Ross fields. This area has been one of the best in the Bakken, and continues to have very good production. Although Brigham gets the credit, there are several big names in the area and nine rigs in Alger Field alone. Hess Corporation (HES) has been very busy in this field and the surrounding areas. Marathon Oil Corporation (MRO) is active in Stanley Field to the southeast of Alger. Whiting Petroleum Corporation (WLL) has acreage in Robinson Lake Field to the south.

One name often forgotten is Oasis Petroleum Inc. (OAS). This Bakken pure play had been in Brigham's shadow, and now Kodiak Oil & Gas Corp.'s (KOG). Oasis has some very good acreage in Mountrail County. Oasis is a very good long term play on the Bakken given improvements seen in completion methods. In tracking the changes in completion design over a period of months or years can give a good idea as to changes we could see in the future. I have written several articles on the subject, and this can vary significantly from one company to the next.

Kodiak, Denbury Resources Inc. (DNR) and XTO Energy (NYSE:XOM) all use significant amounts of water and proppant, while keeping the number of stages down. It is my guess, these companies believe in maximizing the concentrations of water and proppant per stage before increasing the number of stages. Other companies like Whiting are keeping the amounts of water and proppant lower while increasing stages to see its affect on initial production. The problems with completion design is it is difficult to isolate all the variables to see what is working the best. I have found by tracking each company individually, we are better able to how changes in design will effectively increase EURs the most.

Oasis has some very good acreage in Mountrail County. Given its presence here, I am concentrating on several fields very close in proximity. The first is Alger Field, which I covered in a past article on Brigham. I had to use three fields total to accumulate enough well results to formulate a conclusion.

2011 Oasis Mountrail County Results

Name Date Choke Stages Water Proppant 60Day IP 120Day IP
Paradise 5892 11-30H 7/11 26/64 36 75872 4496210 295 252
Ruud 5493 42-23H 8/11 44/64 ? 81437 4584289 486 391
Mallard 5692 21-20H 8/11 112/64 ? 76883 4480294 620 507
Dawson 5494 13-1H 10/11 18/64 ? 83101 4531805 575 423
Spratley 5494 34-13H 10/11 40/64 ? 77129 4399450 928 951
Helling Trust Federal 11-15H 10/11 112/64 ? 79169 4436915 522 437
Caspien 5693 44-11H 12/11 48/64 36 81035 4494832 494 431
Heron 5693 43-12H 12/11 48/64 36 79415 4541467 371 346
Click to enlarge

Oasis has omitted the number of stages in several of its wells in this area. I am unsure as to why this is, but the wells it has listed were all 36 stage fracs. The information I was most interested in was its use of proppant, which is a very large number. Its water usage is also significant. These numbers were good, but the Spratley well in Alkali Creek is a huge well. I would like to think the acreage is better, but the other fields listed are also very good. This was accomplished with a little bigger than average choke. The Dawson well is also quite good when considering the fact that it used an 18/64 choke. All in all, these wells are quite good. The acreage is some of the best in the Williston Basin, so take this into consideration as well. In 2012, Oasis continues to use 36 stage fracs, as seen in the two wells below.

2012 Oasis Well Results In Mountrail County

Name Date Choke Stages Water Proppant 60Day IP Rate
Dunlin 5892 34-32H 2/12 46/64 36 81266

5190103

249
Oasis Meiers 5692 11-19H 2/12 26/64 36 75872 4496210 60
Click to enlarge

These final two wells were not real good, with Oasis Meiers having significant problems. This well was initially brought into production in August of 2011, but the IP rate was done in 2012. If we use 2/12 as the IP rate, the well had a 60 day IP rate of 638 Bo/d. So the well was salvageable. Oasis is currently saving approximately one million per well by using Oasis Well Services. By the end of June, it had already completed nine wells. It estimates a total of 20 wells in 2012. This savings should help to keep well costs down, considering the amount of water and proppant used. I will be real interested in next quarter's results, given the use of its own pump trucks.

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 measured in barrels of oil per day. Water volumes are measured in barrels. Proppant is measured in pounds. This is not a buy recommendation.