Seeking Alpha
View as an RSS Feed

Michael Filloon  

View Michael Filloon's Comments BY TICKER:
Latest comments  |  Highest rated
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Hi Darren,

    The technology can be used in re-fracs and I believe it already is. Older wells utilized source rock stimulation that created fractures that were long and reached deep into the shale. This created much less fracturing near the well bore. This technology creates more fractures there so a refract using this would/should be very affective. If interested here is a very good article on the Octofrac.
    http://bit.ly/1LVTiDz
    It provides some insight into the upside. This means many of the early locations can be redone. I would think this includes all wells through 2012. 2013 started so see some better wells and design improved enough the upside would have a little less upside. Also, refracs can be done multiple times.

    This is true about liquids and proppant demand. We should see more used per well and because of this it does seem that these oil service names have been beaten up a little too much. We like sand names better than ceramic proppant providers. This is because we are seeing sand used much more than ceramics. So I would stick with the frac sand names. Fluids providers should probably be focused around the more "Green" names. These names will probably see more pain in the short term though, as oil continues lower. When WTI prices find a floor it may be a good time to look. Hope this helps! Have a great night!
    Jul 31, 2015. 11:48 PM | 1 Like Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Pablomike,

    I have been really impressed with all results from both the Delaware and Midland Basin. This is probably an area that could continue to increase production as we see dips in the Bakken and Eagle Ford.
    Jul 31, 2015. 01:13 PM | Likes Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Pablomike,

    That wasn't a huge surprise. The biggest issues facing ND right now are differentials and taxes. Both are going to be tough competing with the plays in Texas. Even if those variables weren't a problem, I still think the economics of the Delaware Basin are much better even with the very good results we have seen for EOG. EOG has been a very good litmus test with respect to comparing the core areas of those plays.
    Jul 31, 2015. 11:41 AM | Likes Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Enno Peters,

    I am glad you are passionate about this but we are going to have to agree to disagree my friend. I never said I was wrong, just not interested in hashing over data that has little to do investing on an investment site. Looking at new wells completed with better designs in the same areas, we see a consistent uptick in production, slower decline curves. You are comparing data over a much larger area. Your data could be skewed just from a much lower number of completions in Parshall Field (that is just an example). If we move a rig just 5 sections over the production data will be much different. I am not sure if you are understanding my point, but dont think for one second I am minimizing yours. But again, your data does little for our investment thesis, and what we are trying to provide to investors on this site. I do appreciate you taking the time though, and look forward to discussing this further in upcoming articles. We have another coming out soon that I am sure you will have lots to say about. :)
    Have a great weekend.
    Jul 31, 2015. 09:44 AM | Likes Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Gabor,

    Yes, WLL is using some Mega-Fracs but nothing like EOG. We have seen them used around 6 to 7 million pounds of proppant in wells both in the Bakken and Niobrara. It has not switched solely to these types of frac jobs, but is using it more. WLL has reported a significant uplift in production in those wells. The data we have pulled has shown a significant improvement.
    Jul 31, 2015. 01:02 AM | 1 Like Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Enno,

    Thanks for commenting. I didn't have a chance to look at all of your comments/data, but will address you assertions here. First, I think you are missing the point we are trying to make. I don't generally get into Peak Oil Theory and the generalized data assumptions because it does nothing for us an RIA. Not saying your points are wrong or that they are incorrect, I am just trying to put this as respectfully as I can. What we do has very little to do with what we are trying to do. SeekingAlpha is a platform for investment research, with broad coverage of stocks, asset classes, ETFs and investment strategy. This is what we are interested in and what we generally try to discuss in general here and more specifically on our site. We are not concerned with overall production levels of plays or the US unless it affects our investment thesis. I have had countless conversations with Peak Oil Theorists and others with like beliefs and none of those discussions directly speak about how it will affect a specific stock or the performance of the commodity we could probably have a long productive conversation. But generalizing play production (every horizontal well in the US) doesn't do much for those looking for ideas with regard to investment. Don't get me wrong, you have done a lot of work and that is commendable, but it does little for what we are trying do explain here.

    We have done a comprehensive analysis of every area in the Bakken. This includes Divide, Burke, Western Williams, Northeast McKenzie, etc, etc. These analyses have been done with respect to specific companies to compare operators and the economics of their wells. We hear people talking about decline rates and how they are so high, but no one in the investment world cares about higher decline rates in wells that produce 200,000 bbls of oil in the first year. We only care that at $50/bbl WTI, it produces revenues of $10 M in the first twelve months. One thing I will tell you, and it is where Peak Oil misses the entire point. You put it perfectly when you said "Cherry-picking individual well results to make some general claims, as much of the industry is also doing, is quite meaningless. " The reason this is so telling, is it shows where you and I differ. Specific well results are very important in what we do here on SeekingAlpha. It shows the types of results EOG, CLR, WLL, etc are seeing. It provides us with an idea of the realized oil price needed for each of these companies to drill economic wells, and more importantly survive the downturn. We don't care about data that covers an entire play or country because it is not specific enough. We don't compare operator's well results if one well is in Parshall Field and another western McKenzie County, because the geology is different and the results are skewed because the geology is completely different. The above results show that new Mega-Fracs do improve production in those specific wells. Your data only shows all of the wells and does not address the reasons why. Do you want to know why your data shows that newer wells are producing more but declining faster? Because wells drilled in better, higher pressure areas produce more initially. So production rates are higher, and have to fall further. But like I said earlier, those in oil investments don't care because payback times are what matter. I would like to point out that is goes both ways, what you think we are doing is meaningless but we may feel the same way about what you are doing. Have a great night!
    Jul 31, 2015. 12:31 AM | 1 Like Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    A Farmer,

    There is an issue with rig rate in the US to watch. Operators may start adding rigs to drill core areas once the core fraclog starts to dwindle. Marginal fraclog is an issue as the holes are already drilled but operators will not want to complete those wells until oil prices are much higher than they are today. This may be why we saw an uptick in oil rigs last week, but the question is whether it was just a one time increase or if we see a slight increase/decrease in upcoming weeks.
    Jul 30, 2015. 11:45 PM | Likes Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    A Farmer,

    Thanks for that, I appreciate you taking the time. I would like to be clear on one very important point. We have never said that production hasnt topped out (so we probably agree for the most part on that point), as lower oil price realizations will at some point decrease production. We think production decreases will be most meaningfully felt in the upcoming months as we start to see defaults and a longer more protracted price environment. All of the points we have made here is for production to date. Now as for a backwards revision, anything is possible but we try to stay away guessing and use the figures we currently have. We do think that the current numbers we have from the EIA back our assertion that high-grading and better well design have kept production up. This seems to make sense since we have seen much fewer completions.
    Jul 30, 2015. 01:09 PM | Likes Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Enno Peters,

    Production data from ND does not show that wells drilled in 2014/2015 have steeper decline rates than wells drilled earlier. It would be more interesting if you could back up that statement. If you would like to see our backing of decline rates decreasing, all you have to do is read our articles published here. Decline rates have steadily improved over the years and we have backed it with a huge amount of data. Its fine to make a real generalized statement about something you believe, but I would ask you just as I do everyone to back up their assertions with real data. It is a proven fact (and there are a large number of geophysicists and engineers that will back this up) that wells on similar geology using more proppant, fluids, tighter stages and better fracturing techniques decrease the decline curve. As long as operators continue to improve well design, similar geology will produce better. This improves even when a well is already drilled on a pad (which is generally the best result, as its kind of like opening a pop bottle, once you let some pressure out the other wells on the pad have decreased well pressures). As for production peaking, its pretty obvious that as long as oil is below $50/bbl. operators will not be motivated to increase production. Improved well production is the only way that production can be maintained with decreasing completion numbers. I will be interested in the data you have to share to show that newer wells have higher decline rates.
    Jul 30, 2015. 12:02 AM | 1 Like Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    A Farmer,

    You could be right anything is possible. I don't think I ever said that oil production wouldn't decline, only said that to this point it hasn't. So I'm unsure where you are getting that. The main point we have tried to make is that most have been wrong about this predicted swift move down in production. It wasn't too long ago that many were saying we needed $70/bbl oil for shale production, but that was wrong. It was wrong not just because of Mega-Fracs and other technologies, but a misconception on the differences in well economics from marginal to core areas. We also understand well production and how it models, and that the generalized depletion numbers being used aren't even close.

    Its true that productivity increases weren't notably better in past down cycles, but that is another error we see made consistently. Horizontal production cannot be compared to crude production to date because it is in its infancy and completely different than standard vertical production. It is complicated and difficult in comparison, and the fact we have seen the types of improvements to date show the differences. Wells in 2006 were lucky to see 70000 or 80000 Boe in the first year, and now wells in those areas can see production 4 to 5 times that. It isn't because the geology is any different, but because the US oil industry has gotten that much better. Technology is moving forward because the industry wants to do better. Its about being a success and making a hard earned dollar. I wouldn't bet against the industry, you will lose. We are just beginning to see what they are capable of. Not so bad looking at the leaves, most people just stair blindly at the whole forest and never get the details.
    Jul 29, 2015. 07:26 PM | 2 Likes Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Carolina1954,

    That is an excellent question, and the truth is no one really knows the answer. Is it possible production has rolled over more than the EIA numbers indicate? Maybe, but we think that some of the problems with the estimates is it does not fully show the improvements in production that we are seeing. Whether an operator is doing a Mega-Frac type well or not, production is still increasing much faster and decline curves have flattened. So its possible this assertion is incorrect, but oil production will start to decline more with lower oil prices. Once we get below $50, its going to start getting interesting for operators with marginal acreage and high levels of debt.
    Jul 28, 2015. 08:46 PM | 1 Like Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Ocean Man,

    Thanks! It was definitely better than we expected (thought a little closer to $5M), but still could see that number come down to $4M.
    Jul 28, 2015. 08:25 PM | 1 Like Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    blueice,

    Lower oil was something that was bound to happen but this was probably a little sooner than anticipated. I am lucky to know Craig, he's definitely in a class all his own.
    Jul 28, 2015. 08:05 PM | 2 Likes Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    darnoc111,

    They are experimenting with the process and to be clear EOG does a much better job than anyone, so those types of production results are skewed to the upside. It does provide a very good idea of where things are going though. The process can be used in re-fracs but EOG isn't interested in doing it. Other companies have, and it would seem gas dominated wells respond much better than liquids rich, but we probably need more data on this. Right now we are seeing some re-frac programs being announced and the upside could be quite good. These programs would need to be focused on core acreage now but could be expanded to non-core areas once the price of oil improves.
    Jul 28, 2015. 07:59 PM | 1 Like Like |Link to Comment
  • Bakken Update: Mega-Fracs Are The Reason U.S. Oil Production Remains High In A Low-Price Environment [View article]
    Lakeside,

    Nice to see you here Bruce, and thanks for sharing your knowledge. Its appreciated!
    Jul 28, 2015. 07:41 PM | Likes Like |Link to Comment
COMMENTS STATS
4,405 Comments
3,627 Likes