Idle Chatter Regarding the "Halo Phenomenon" In The Bakken; "The Bakken Magic" -- October 3, 2019

Updates

October 5, 2019: as of today, I'm going to start referring to this phenomenon as "the Bakken magic." And unless someone shows me that it is happening in the Eagle Ford or the Permian, I will consider it unique to the Bakken.

Original Post 

This post was quickly done: not ready for prime time.

At an earlier post, a reader wrote:

One thing to watch for (not saying it's a problem, just something to check): FracFocus is known for slow reporting of recent completions. See the discussion by EIA in the DPR. So, I worry that some of your "no refrac" comments may be about wells that did have a refrac that will show eventually. Maybe looking at several of your posts from over a year ago, where you said there was no refrac, will now show that there was a refrac.

Not saying this is a major issue. But it may affect some of the wells you look at.

I replied:

You are absolutely correct. I do believe that FracFocus did not "capture" wells that were fracked before 2012 or thereabouts, and I've mentioned that on the blog. FracFocus went "live" sometime around 2012.  It's possible FracFocus will go back and "capture" these early wells. I don't know.

However, now that FracFocus is active, I find that FracFocus posts frack data before the NDIC, or better said, perhaps: when I can't find frack data at the NDIC site, I often find it at FracFocus.

FracFocus also "never" makes a mistake. I put "never" in quotations because there are always exceptions. I have found one -- yes, one -- mistake over at FracFocus (amount of proppant) and I pointed that out on the blog.

Finally, "all" Bakken wells are fracked. When I say a Bakken well has not been re-fracked, I'm talking about a second frack. "All" Bakken wells are fracked at least once. "All" is in quotation remarks because there always exceptions.

Now, a couple more points:

When I find a well that, based on a huge jump in production, "had to have been re-fracked" and FracFocus does not have that data, I check the operator's sundry forms at the NDIC site to see if there is evidence of a re-frack. It now seems to be rare where FracFocus does not have the data of a fracked well when the NDIC has that data.

Second, and this is very, very important. When I first started seeing "jumps in production," what I ended up calling the "halo effect," I tried to see if there might be some explanation. There could be many different explanations for a "jump in production," and that's why I called it a "halo" effect early on and did not get more specific.

I now feel very, very comfortable with the phenomenon, regardless of the reason for a jump in production for a specific well -- as noted, it can be for many reasons.

Because I feel very comfortable with this phenomenon, I generally no longer seek to find the answer. I no longer care. Don't take that out of context. I care, but I only have so much time to check things. Again, there are and there will be exceptions. I generally no longer check the sundry forms, or the NDIC GIS maps, or FracFocus looking to explain "this" phenomenon. I no longer care. The purpose of the blog is to get a general feeling of the Bakken, not to sort out each and every well.

I have gone back to looking at this "halo phenomenon" from the point-of-view of the small mom-and-pop mineral owner. Most small mineral owners do not care why their royalty checks increased.

In addition, from an investor's point of view, I have yet to hear even one analyst (in the earnings conference calls) ask whether this phenomenon exists. [I think there may be an exception to this also but if there was it did not amount to anything.]

So, in general, I'm back to square one, or perhaps better said, I'm switching gears again on this subject. In general, I will only note the jump in production. It will be by exception if I look for a possible reason. I no longer care if I know the exact reason for a jump in production for any given well.