Jan
03
Posted by MichaelFilloon
It was once thought
Oasis’ (OAS: 31.91 +2.64%) non-operated Sanish acreage was its most productive. Recent results by
Kodiak (KOG: 8.66 -0.46%), Newfield (NFX: 38.29 +1.86%) and
Whiting (WLL: 49.50 +1.29%) have brought this assertion into question. Kodiak’s Koala results culminated in this stock appreciating from less than $4/share to almost $10/share in just three months. Newfield has had several good McKenzie County well results, but slowed its program due to poor cost containment. Whiting recently released a record result in its Tarpon prospect, which was much better than even
Brigham’s (STO) best well. Whiting’s Tarpon Federal 21-4H had an IP rate of 7009 Boe/d. All of this is bullish for the area and Oasis’ Indian Hills prospect.
Indian Hills is located in northern McKenzie County. Recent well results have been bullish this area in both the middle Bakken and upper Three Forks pay zones. Kodiak’s Koala wells are on the southeast border of Indian Hills. Kodiak’s Koala wells have performed much better than anticipated:
- Koala 9-5-6-12H3: IP rate of 2327 Boe/d, 90-day IP rate of 980 Boe/d
- Koala 9-5-6-5H: IP rate of 3042 Boe/d, 90-day IP rate of 1103 Boe/d
- Koala 3-2-11-14H: IP rate of 3412 Boe/d, 60-day IP rate of 1230 Boe/d
- Koala 3-2-11-13H: IP rate of 3021 Boe/d, 60 day IP rate of 1004 Boe/d
For those new to Bakken well results, I will clarify how important these results are. IP rates are used to calculate the estimate ultimate recovery (EUR) of wells. The further out the IP rate the better idea of how much resource the well will produce. Here are the 60 day IP rates for some of the most recent and best Brigham wells:
- Lucy Hanson 15-22 #1H: IP rate of 4358 Boe/d and 60-day IP rate 934 Boe/d
- Gunderson 15-22 #1H: IP rate of 3905 and 60-day IP rate of 1220 Boe/d
- Sorenson 29-32 #2H: IP rate of 5330 and 60-day IP rate of 1371 Boe/d
- Cvancara 20-17 #1H: IP rate of 4402 and 60-day IP rate of 1229 Boe/d
These Kodiak wells had results in line with Brigham’s best Ross and Roughrider wells. This was accomplished with only 24 stages, compared to Brigham’s 36 to 38 stage wells. I would expect the Koala wells will perform much better once 30 stage laterals are performed. It is important to note the first Koala well listed above was from the upper Three Forks pay zone.
There are further reasons to be bullish Indian Hills. The Kodiak Koala wells are in Poe field on the southeast border of this prospect. Continental (CLR) announced in its third quarter earnings release there were four Three Forks benches, and reaches thicknesses of up to 270 feet. Continental found the first two benches of the Three Forks are fairly uniform throughout, but the third and fourth benches have a more localized development. On the eastern border of the Indian Hills prospect in Banks field is Continental’s Charlotte 2-22H. Results from this test well point to the possibility of all four Three Forks benches being commercial in this area. If this is the case, my estimates have wells in the southeast Indian Hills prospect of:
- 4 middle Bakken wells
- 4 first bench of the Three Forks wells
- 4 second bench of the Three Forks wells
- 4 third bench of the Three Forks wells
- 4 fourth bench of the Three Forks wells
Twenty wells per 1280 acre spacing is an aggressive estimate, and these numbers depend upon completion methods as Continental believes it can fracture more than one bench at a time which would decrease the number of wells, but not the total amount of resource. If this is the case, total cost per well would decrease significantly, without creating any difference in production.
Southeast Indian Hills prospect has a lot of promise, but there have been good results throughout the play. Here is a list of completed Brigham wells throughout this play:
- Abelmann 23-14: IP rate of 4169 Boe/d and 60-day IP rate of 1155 Boe/d
- Greenstein 30-31: IP rate of 3232 Boe/d and 60-day IP rate of 808 Boe/d
- Brakken 30-31: IP rate of 3573 Boe/d and 60-day IP rate of 955 Boe/d
- Lippert 1-12: IP rate of 2214 Boe/d and 60-day IP rate of 729 Boe/d
Brigham has done a good job of de-risking its acreage in north McKenzie County. It was ahead of the curve with respect to initial production rates. This could be through drilling and completion methods, or superior acreage. It is difficult to know if Oasis will be able to duplicate these types of results, but initial production numbers have been getting better as the company uses more stages and increases proppant. Most importantly, the prospect is good and will be a big producer for Oasis in the long term.
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Tags: boepd CLR Indian Hills KOG NFX OAS STO wll
Dec
21
Posted by MichaelFilloon
The average Bakken investor is well versed on Brigham (STO). Brigham Exploration routinely outperformed the competition. It was well positioned in Alger Field, which is possibly the best middle Bakken play in the Williston Basin. When Brigham announced it was being purchased by Statoil, Bakken investors flocked to Kodiak Oil and Gas (KOG: 8.66 -0.46%) as it purchased a very large number of acres in southeast Williams and northeast McKenzie counties. These two companies gained attention through very good initial production rates. Brigham’s best were in Alger Field, while Kodiak produced very good wells in the middle Bakken and upper Three Forks.
These two companies have gotten most of the attention as pure Bakken plays. Oasis (OAS) has been in the shadow of Brigham and Kodiak, but this could change very soon. Oasis has over 303000 net acres in the Williston Basin. This breaks into three areas:
1. West Williston: 191716 net acres in southwest Williams, northwest McKenzie, and eastern Richland and Roosevelt counties.
2. East Nesson: 102786 net acres in western Mountrail and west Burke counties
3. Sanish: 8729 net acres in the Sanish field area
Oasis has 9 rigs running with 7 in West Williston and 2 in East Nesson. It has quietly increased production significantly since the second quarter of this year, when it produced 7893 Boe/d. Oasis estimates it will produce between 11000 and 12500 Boe/d on average for the full year of 2011.
Oasis’ Sanish acreage is probably its best outside of its Indian Hills acreage. The Sanish is non-operated, and currently can support four middle Bakken and three upper Three Forks locations per 1280 acre spacing. Oasis’ Cottonwood play is northwest of its Sanish play. It consists of Mountrail County and into southern Burke County. The Cottonwood play has much better production at its most southern acreage. As the play heads north and into Burke, the wells are less expensive. Its most northern acreage in Burke County is Oasis’ St. Croix. Oasis has one result (Rebne 11-7H)here, which had and IP rate of 175 Bo/d. For comparison sake, its Berry 11-6H is west of the Sanish and had an IP rate of 2023 Bo/d.
Its West Williston leasehold is broken down into four parts:
1. Indian Hills- Northwest of Kodiak’s Koala prospect
2. Red Bank-Northwest of Brigham’s Roughrider
3. Mondak
4. Hebron
Indian Hills is has great potential. The acreage is probably not as promising as Koala, but has significant upside. The southeast point of Red Bank is also quite good. That said, Oasis has an abundance of good acreage that will allow them to execute their operational strategy. Overall, the acreage Oasis currently owns is not as good as Brigham’s but should only sell at a minor discount to it’s Bakken competitor.
Oasis’ management has done a great job ramping up production, especially when we take into consideration the Bakken winter which slowed oil and gas production to a stand still. The flooding made things worse as trucks could not get in and out of the well sites. Oasis has met earnings estimates for three straight quarters after a bad miss in December of 2010. This company has stated rising costs of oil service has placed a strain on its business. Because of this, Oasis has started up its own well service business, which helps to take the fear of fracking costs continuing to rise.
In summary, Oasis has a very good acreage in the Williston Basin. It has kept costs in check, and has seen its initial production rates increase significantly in a short period of time. It has expanded it infrastructure and is better prepared for winters going forward. Keep an eye on this company, as it is no longer in Brigham’s shadow.
This article was written by new BakkenStocks contributor, Michael Filloon. Michael is well versed on companies operating in the Bakken region and we look forward to more articles from Michael in the coming year.
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Tags: BEXP Brigham Hebron Indian Hills Mondak OAS oasis Red Bank
