The Cost Of A Re-Frack In The Bakken -- October 3, 2018; Curious If Readers Disagree With Me

A reader asked if I knew the cost of a re-frack. I would be very interested in an expert chiming in -- the cost of a re-frack in the Bakken.

This was my "not-ready-for-prime-time" reply.

1. During the height of the boom, the cost of drilling and fracking was almost exactly 50-50. So, a $10 million well: fracking cost $5 million. The $10 million did not include the infrastructure as far as I know.

2. Since then, total costs have come way down to complete a well, let's say, $8 million (Whiting and CLR in their presentations say much less, but they probably exaggerate). Drilling costs have come way down but fracking -- due to cost of sand (higher cost and using more of it) -- has increased in cost relative to drilling.

3. So, I'm assuming, a re-frack costs $4 million +/- a million.

4. But, what folks really forget is all the time and cost in getting the infrastructure; the roads (some roads are 20 - 30 miles from the highway, and completely built by the operator), the pad, the electric transmission lines running out to the pad, etc., etc., etc -- none of those costs. No upfront new bonus money to royalty owners; the 1280-acre unit is held by production. So, although $4 million seems on the high side for a re-frack, I think it's very cheap for a brand new well -- sometimes that brand new well is many times better than the original well. In addition, the operator already knows what is there; it's not a wildcat. In the old days, there were such things as "DRY" holes -- something millennials have probably never heard of.

5.  But to answer the question, the cost of a re-frack is $4 million, +/- a million dollars. That's my story and I'm sticking to it until I hear differently.