DI Blog

Insights across the energy value chain

Instead of grouping all the top Bakken operators highlights into one blog, I’ve decided to break it up into two segments. This way I will be able to report on operators that have already released, rather than waiting until all have made their quarterly announcements. The fourth quarter is the most exciting for conference calls since results from the entire year are usually discussed. So far, it seems like the general trend has been reduction in drill time, transition to pad drilling, and pretty much an overall attempt to bring drill and completion costs down. On top of this, operators are increasing production rates and optimizing completion techniques. Here is a quick rundown of some of top Bakken operators that have released so far:

Hess:
• Net Production averaged 56 Mboed in 2012, up 87%
• 4Q12 net production averaged 64 Mboed, up 68% from 4Q11
• Drill and completion costs down by 30% during the course of 2012 from 13.4 MM to 9 MM/well
• Fourth quarter marked a transition to pad drilling
• Hess moved from a higher cost 38-stage hybrid completion design to a lower cost sliding sleeve
• EURs averaged between 550 – 650 MBOE
• Average 30 day IP ranged between 750 -950 boed
• 2013 CapEx for Bakken operations is $2.2 billion compared to $3.1 billion in 2012
• 2013 forecasted net production to average between 64 – 70 Mboed
• Plan to operate 14 rig program
• Hess plans to bring 175 wells to production throughout the year. Roughly 2/3 will target the Middle Bakken while the remainder will be Three Forks wells.

OXY:
• Reducing activity in the Williston Basin
• Costs for unconventional efforts too high

XTO (ExxonMobil):
• Acquired 100% of Denbury Resources’ Bakken assets which consist of 196,000 net acres in ND and MT, along with 15 Mboed.
• Acquisition increases ExxonMobil’s acreage to nearly 600,000 net acres
• Denbury acreage is high-performing Middle Bakken and upper Three Forks area
• 2012 gross Bakken production 33,000 barrels/day

Marathon:
• 410,000 net acres
• Running 5 rigs and 2 frac crews
• 4Q12 average net Bakken production was 35 Mboed, compared to 30 Mboed at YE 2011
• Brought 18 gross wells to sales in the quarter
• 4Q average drill time, spud to spud, was 27 days
• Marathon’s Bakken production averages 90% oil, 5% NGLs, 5% dry gas
• The company plans 65-70 net wells in 2013
• Switching to multi-well, pad-drilling which can take drill time to 13 days/well (avg. 19 days)
• Plan to drill longer laterals, which will offset shorter drill time savings
• Bakken well costs in $8.5 to $8.8 MM range
• 40% of takeaway by rail compared to only 5% this time last year

MDU Resources (Fidelity Exploration and Production):
• Plans to invest $200 million in the Bakken this year
• Plan to operate 3 to 5 rigs
• Current net Bakken production at 7 Mboed
• Well costs are currently at $7.5 MM
• Drill times are at 17 days
• In Mountrail and Stark Counties MDU is targeting the Middle Bakken with Three Forks potential
• In Richland County MDU is drilling the shale and so far only able to drill 640s. Still learning how to drill 1280s in respect to wellbore stability.
• Finding that the completion techniques used in the middle member are not turning out good results in the shale. The two wells they have drilled in Richland County will have to be recompleted, and then MDU plans to drill a couple more in the area this year.

Below is a map that I have provided, with DI Desktop, to get a spatial perspective of where these mentioned companies have wells drilled and producing. One can get an idea of where the highly producing wells are located. Also, I have added a chart showing recent production metrics for these operators at YE 2012.

For more information on all things Bakken related check out the Bakken folder in the DNA section of Drillinginfo. This is found in the “DI -Shared with All Users Folder.” Also, come back and visit the Bakken URB in a couple weeks to read up on Part 2 of the earnings call highlights.

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Matt Menchaca

Matthew Menchaca is a Research Analyst at Drillinginfo. He is a key member of the Data Management Department and the DI Analytics group. He performs industry research, tracks play development and provides various types of analysis on unconventional resource plays in the U.S. Matthew graduated from the University of Texas at Austin in 2010 after studying Geography and Geological Sciences.