Thompson Lake Field Update -- Bakken, North Dakota, USA

Thompson Lake oil field is a very small field in the Williston Basin. It is only seventeen (17) sections. It is immediately east of the Cottonwood oil field, fairly north and east as far as the Bakken goes.  It is north of Kittleson Slough and Clear Water oil fields.

Thompson Lake caught my interest on March 28, 2011, when EOG was issued four permits in section 26 of T159N-R91W.

As of today, there are three producing wells in Thompson Lake:

• 17205, 197, EOG, Vanville 1-14H, spudded 9/08; tested 11/08; 60K; short lateral
• 18862, 164, EOG, Vanville 6-25H, spudded 6/10; tested 9/10; 22K; long lateral
• 18483, 110, Petro Harvester, LLC, Kallberg 1H, spudded 12/09; tested 5/10; 23K

Permits pending:

• 20076, EOG, Vanville 15-1102H
• 20662, EOG, Vanville 22-2623H on same pad as 20663, long lateral runs north
• 20663, EOG, Vanville 21-2635H on same pad as 20662, long lateral runs south
• 20664, EOG, Vanville 24-2623H, on same pad as 20665, long lateral runs north
• 20665, EOG, Vanville 23-2635H, on same pad as 20664, long lateral runs south

Comment:
This is another example where initial production numbers don't look all that good, but yet the operator continues to put in more wells. This speaks volumes. Several things I take away from this:

• A reminder that there are "no" dry holes in the Bakken; 
• Even mediocre wells in the Bakken will eventually pay for themselves;
• For EOG, the Bakken was "robust" at $40; oil at $104 looks sustainable;
• Holding leases by production is undervalued; once production established, leases are held for "eternity" -- expectations that Bakken wells will produce 30 years
• Regardless of initial production, analysts still predict EURs of 400,000 for even the most mediocre Bakken wells (at $50/bbl --> $20 million; at $100/bbl --> $40 million);
• Depletion allowances, depreciation amortization, tax considerations, et al, need to be factored in; and,
• There's always a chance for a gusher