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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Nov
19
Posted by bakken
The theme from previous weeks still prevailed last week with EU debt issues causing some schizophrenia in the market. The Dow lost 300 points over the course of the week and oil lost some ground to about $97 but is still up significantly in the last month. Investors are still in the process of looking for a new favorite (now that Brigham has been acquired) in the Bakken region, there are a number of front runners, and Kodiak (KOG: 8.66 -0.46%) made a move this past week to try to rise to the top. More details listed below:
- On Monday, Kodiak Oil & Gas Corp. (KOG: 8.66 -0.46%) said it has agreed to acquire North Dakota assets for $590 million in cash and stock to expand the energy exploration and development company’s presence in the Williston Basin. Kodiak also said it will offer 37.5 million common shares to fund the transaction and significantly increase its capital expenditures next year. The company also said its board has approved a $585 million capital expenditure budget for 2012, more than double the $230 million for the prior year, allocated to oil and gas activities in the Bakken and Three Forks oil play in the Williston Basin.
- Bloomberg reported that rising crude output in the Bakken shale formation is set to make North Dakota a bigger oil producer than OPEC member Ecuador. “There’s been an amazing jump in North Dakota output,” said Rick Mueller, a principal with ESAI Energy LLC in Wakefield, Massachusetts. “We are looking for output to be anywhere from 700,000 barrels to 1 million barrels a day within five years.”
- Anadarko Petroleum released news on a huge new shale find in Colorado. Approximately 1.5 billion barrels of oil were discovered by Anadarko Petroleum (APC: 84.34 +2.65%) at Colorado’s Niobrara Shale. J Christionsen , an APC spokesman said “Everything you could possibly want in a play — this has it. It’s great news for us and for Colorado because it’s going to generate a lot of activity and investment for a number of years,” The find could inject close to $4 billion in annual revenue for the area, it could sharply reduce U.S. dependence on foreign oil even more.
Until next time, Keep drillin’ in the Bakken!
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