Comments On Today's Director's Cut -- April 14, 2015

Updates

Later, 4:28 p.m. CT: Reuters is reporting that largest share of the 900 unfracked wells belong to EOG: 

Wells owned by oil producer EOG Resources Inc comprise the largest number of an estimated 900 North Dakota wells waiting to be fracked, state officials said on Tuesday.

The number of new wells that have been drilled but waiting to be fracked has risen in recent months amidst a more than 50 percent drop in crude prices and an expect $5.3 billion industry tax break in June.

While the estimate of unfracked wells had been published monthly, it wasn't clear until Tuesday which companies were delaying fracking. Oilfield service companies have aggressively sought the information, hoping to drum up new business with those delaying.

EOG is "able to drill a lot of wells and maintain production, while still bank a lot of wells for future price increases," Lynn Helms, head of the state's Department of Mineral Resources, said on a conference call with reporters.

Thank you, Mr Helms for helping elucidate.
 

Original Post

Some quick comments on today's Director's Cut (data for February, 2015).

The Red Queen is still upright on the treadmill. Note that production decreased only 1% month-over-month despite the huge decrease in the number of completions. At the height of the boom one could expect 175 completions/month. In February, the number of completions was 42. Wow. NDIC suggests that 110 - 120 well completions/month are needed to maintain 1.2 million bopd production.

In the past, NDIC suggested that 115 well completions / month were needed to maintain 1.2 million bopd production. That number has now changed to a range of 110 - 120.

Flaring capture rate statewide is 81%. Flaring capture on the reservation (FBIR) is now 83%. The FBIR used to be the long pole in the tent when it came to flaring capture but that looks to have been resolved (most likely due to decrease in well completions, choking back, etc).

The director does not break it out, but my hunch is the low price of oil drives the number of active rigs, and where they drill; but, the NDIC flaring rules have a greater impact on well completions. There's no way to know, but one would think that if one is going to drill a well, one would want to complete it, all things being equal.

The number of wells waiting completion continues to increase, now up to 900. There is no precedent so there is really no way to predict when this number will peak. For folks who hope that the price of oil will rise, this is perhaps not a good omen.

The director did not mention operators discussing re-fracking older wells. Whiting alone may have as many as 115 wells that could be suitable for re-fracking. Long before the slump in oil prices, Marathon announced a re-fracking program.

The number of producing wells continues to increase.

Although permitting is down, it is not down significantly; this is probably due to pad drilling.

Today's price for Bakken ($36) is higher than the price one month ago ($32).

This was a particularly interesting comment from the Director's Cut:

"As you are aware the exploration well in Emmons County is not longer on confidentail status as of 12/23/14. The well has not been completed yet, but appears to contain 2 pay sections totaling about 80 feet thick with very good gas shows."