The Bakken play in the Williston basin could become the world's largest discovery in the last 30 - 40 years.This was the lead story in Rigzone today, February 17, 2011, on a day when the number of rigs actively drilling in North Dakota blew through two records in quick succession.
The data points were those of a Continental Resources senior manager:
- CLR's estimates: 24 billion recoverable bbls in the Bakken; represents five times the US Geological Survey's 2008 estimate
- The new estimate compares with the 151 million bbls the survey put forth as recently as the mid-90's
- Close to 2 billion bbls of the 24 billion will come from the underlying Three Forks
- CLR helped proved that the Three Forks was a separate reservoir from the Bakken
- The middle Bakken is more porous and permeable than both the upper and lower Bakken
- Production exceeds 400,00 bopd including Montana and North Dakota
- Recovery of the oil will take years
- The industry has completed 2,750 horizontal wells since 2000
- Currently: 165 rigs that will drill 1,800 more wells in 2011
- Production could reach 1 million bopd in a few years
- The Bakken is continuous under nearly 15,000 square miles
- Most operators are now drilling 9,500 foot laterals with 18 - 30 frac stages/well
- Optimum number of frac stages is not known, but fracking appears to reach a point of diminishing returns between 18 and 24 frac stages
Bakken Still Top Oil Play In No. America
ReplyDeleteBarron’s Investors' Soapbox PM WEDNESDAY, FEBRUARY 23, 2011 Energy Picks Boosted by Bakken Formation
The Bakken is seen as a top oil play in North America. Ticonderoga Securities
The early take-away from this earnings season is no surprise. Oil-weighted producers are achieving higher net asset value (NAV) growth, and companies with strong oil/liquids growth are being rewarded by the market. Among the companies we cover, Cimarex Energy (XEC) (rated at Neutral) is up 27% year-to-date, EOG Resources (EOG) (rated at Buy, price target of $110) is up 18%, and Devon Energy (DVN) (rated at Buy, price target of $105) has gained 11%.
For comparison, the S&P exploration and production (E&P) super composite has risen 7% during the same period. However, while the focus seems to be on newer emerging liquids-rich plays such as the Eagle Ford (Texas), Permian (Texas/New Mexico) and Niobrara (Wyoming), investors should not overlook companies with high exposure to the Bakken Formation (Montana/North Dakota/Saskatchewan), which in our view, is still the top oil play in North America.
Continental Resources (CLR) (rated at Buy, price target of $67) and Whiting Petroleum (WLL) (rated at Buy, price target of $134), whose shares are up 11% and 6% year-to-date, respectively, are highly focused in the Bakken, where all indications point toward a solid operational report.
Newfield Exploration (NFX) (rated at Buy, price target of $87) reported a 157% increase in Bakken reserves in 2010, and EOG said that after-tax internal rates of return in the Bakken are currently 65%-110%.
Brigham Exploration (BEXP) (not rated) grew its Bakken reserves 260% in 2010. Continental Resources is the dominant leaseholder in the Bakken with about 870,000 net acres, and Whiting controls about 579,000 net acres. Both companies have exposure to newer/emerging oil plays that could provide some positive data points in Thursday's release. EOG also stated that the company is getting more positive on drilling results in the Niobrara, where Continental has 73,000 net acres and Whiting holds 96,240 net acres.
-- Daniel Pratt
-- John Malone
-- Paul O'Donnell
See http://online.barrons.com/article/SB50001424052970204395804576162422714012778.html?mod=BOL_article_full_popview#printMode
They say Libya exports about 1.5 million bbls/day.
ReplyDeleteAnalysts suggest North Dakota will produce about 1 million bbls/day by 2015 -- not all that far off from 1.5 and much more stable environment. A bit colder, I suppose, in the winter.
The Barron's story is quite incredible. It was a great story before the Mideast wildfire started; now the Bakken moves front and center on the investing scene.
ReplyDeleteExposure to Lybia = 33,000 bbls oil price spike =$20.00 x 385,000 BOPD = wash. 900,000 acres Bakken in progress =Priceless. Love flying under the radar sometimes it is better to lay low.
ReplyDeleteYes, it's an incredible story. It is very, very interesting. And you are correct: that price spike can't hurt.
ReplyDelete