Wednesday, March 15, 2017

Worth Repeating -- Break-Evens In The Bakken -- March 15, 2017

From an earlier post, November 25, 2016:
From The Sidney Herald: Break-evens are lowest right now in Dunn County at $15 West Texas Intermediate, followed by McLean County at $16, McKenzie at $17 and Williams County at $24. Williams County’s break-even rose $1 and was the only county to post an increase.
“Industry efforts have moved to lower and lower break-even prices, so when we get into the third quarter of this year, we can break even on wells under $30 a barrel, meaning all counties in North Dakota are better than break-even for drilling,” Helms said. “Industry is looking at adding a dozen rigs.”
From an October 28, 2016: Whiting says it can make money on $25-oil.
For newbies: operators and analysts have all kinds of ways of determining break-even points. How folks calculate these numbers can vary widely.

I would think the following would add huge expenses for operators:
  • up-front one-time lease money
  • building the pads
  • building the roads out to the pads
  • putting in water/waste-water infrastructure
  • wasted time putting up/taking down rigs; moving from site to site
To great extent, these are all history with pad drilling. 

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