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Bakken Update: 30 Of The Best U.S. Oil Wells Show Why Operators Can Compete Internationally
Michael Filloon Oct. 16, 2016 1:08 AM ET
Summary
1. The best unconventional wells in the US continue to get better, with some locations producing over
60,000 Bbls of oil in the first month.
2. Shale production has pushed the US closer to energy self-sufficiency, and has tipped the balance
world oil markets.
3. Operators continue to produce play best type wells through enhanced well designs or Mega-Fracs,
and we expect these types of results to continue going forward.
4. Improving shale economics have made it competitive on an international level, as production from
deep water is losing out on operator cap ex.
"The United States has a large number of plays. Only a rare few do well with oil at $50/Bbl."
"North Dakota had five locations over three counties. Hess (NYSE:HES), Oasis (NYSE:OAS), Statoil (NYSE:STO), QEP Resources (NYSE:QEP), Marathon (NYSE:MRO), WPX Energy (NYSE:WPX), Halcon (NYSE:HK), Triangle (NYSEMKT:TPLM), Emerald (OTCPK:EOXLQ), Abraxas (NASDAQ:AXAS), and Samson (NYSEMKT:SSN) all have acreage near these locations. Where the wells are is interesting as there is a distance of over 50 miles between two locations. The Bakken core continues to widen and cover more territory. There are five wells in Wyoming. All of these are in the Powder River Basin. We are starting to see this play emerge with some terrific results. It has not been as good as the Bakken and Permian but results are improving rapidly."
"In summary, we continue to see better economics from unconventional oil production. This not only was a big contributor to the current oil glut, it may keep oil prices low well into the future. The wells in this article are not typical, but should be seen as the high end of today's producers. The fact that operators can get these types of results, shows the upside to core areas. We are starting to see a large number of new locations produce 20,000 to 30,000 BO in the first month, in the best core areas. Well designs continue to improve through shorter stages and tighter frac cluster placement. It is impossible to know how much better wells will get, but the industry has shown these production improvements can occur quickly. We probably have plenty of upside from here. Although current wells cannot compete with conventional wells in Russia and Saudi Arabia, it will continue to push deep water barrels out of the market."
Michael Filloon Follow (6,273 followers)
Oil & gas, energy, hedge fund manager, commodities
---------------------------------------------------------------------------------------------- Bakken Shale
Continuous improvement in well performance and economics for Bakken Shale wells MAIERDAN HALIFU, RYSTAD ENERGY 10/17/2016
Conclusion
As the industry continues to experience the effects of a longer term and a more pronounced downturn, E&P companies have become more judicious in deciding what acreage to drill, and more efficient when drilling while optimizing completion design. These trends are exemplified in the increase in average proppant per well and the average number of stimulation stages per well in the Bakken Shale as well as the concentration of the rigs in the four 'core counties' of the Bakken. As a result of these trends, we continue to see an increase in the average well EUR and a continuous drop in average well costs and wellhead breakeven oil price. We can expect to see these trends being replicated throughout the North American shale space, as the commodity price requires innovative strategies for companies to maintain profitability.
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Have a great weekend everyone,
MS
SSN Price at posting:
0.5¢ Sentiment: Hold Disclosure: Held
