Flurry of Whiting Activity North of Belfield (Bakken, ND, USA) -- Lewis and Clark Prospect -- WLL

I am told that there are now traffic lights about a half-mile north of Belfield, about a half-mile north of I-94 where a county road intersects US Highway 85 (the north-south highway into Belfield). These are the first and only traffic lights in Belfield; if you want to see the next nearest traffic lights you have to drive to Dickinson, Williston, or Baker (Montana).

Unless there is some significantly increased traffic at this intersection, on first look it seems to be an unusual spot for first-ever traffic signals in Belfield.

A bit to the northwest, Whiting has recently opened a new prospect: their Lewis and Clark prospect which, according to a recent Whiting presentation, is centered around the Bicentennial field. The Lewis and Clark prospect is where the Three Folks pinches out -- or extends -- from the Bakken formation.

But the Bicentennial is quite a ways from the traffic lights just north of Belfield. Is something else going on?

Looking at the NDIC GIS map server just a couple miles to the east of this new traffic signal, I notice a rig on site, with permit number 99189, Mann 33-18. That's a very, very unusual permit number. In fact, it is the only 99XXX permit held by Whiting. It turns out it is a stratigraphic well. It is located in the four-section oil field called North Creek. Meanwhile in that same section (18-140-98) Whiting has almost completed another well, permit 19337, Mann 21-18TFH, a wildcat, even though it is sitting in a designated field.

Just to the west of this well, in section 13-140-99, is another Whiting well, on the confidential list, #18837, Kubas 11-13TFH, a wildcat.  It's another Three Forks well and is listed as "plugged or producing" on the NDIC website, as of September 29, 2010.

Less than a mile west of the Kubas well, closer to US Highway 85, is Whiting's permit 19819, another wildcat, Lydia 21-14TFH, and another Three Forks well.

Three miles and four miles to the west, on the other side of US Highway 85, are two more wildcats, #19623 and #19444, Obrigewitch 21-17TFH and Hecker 21-18TFH, both Whiting wells and both wildcats.

One last well to take a look at. This is another Whiting well, #19562, Brueni 28-1H. The Brunei is in the opposite direction, two miles southeast of the stratigraphic well, towards South Heart where there has been a flurry of activity lately. It does not have the TFH designation, so I assume it's a Bakken well, but don't know for sure. It would make more sense for it to be a TFS well. We'll see.

It doesn't take much to get my mind imagining things. In this case, the new traffic lights just a half mile north of Belfield, along with the only stratigraphic well that Whiting currently is drilling, and a number of wildcats in the immediate area targeting the Three Forks area suggest to me that a) Whiting is looking to find the southeastern limits of their Lewis and Clark prospect; and, b) Whiting is looking at putting in an operations center of some sort north of Belfield.

Updates

April 28, 2011: 19444, 3,106, WLL, Hecker 21-18TFH, huge story, click on link

February 26, 2011: WLL corporate presentation. This "flurry of activity" is now called the Lewis and Clark prospect by Whiting. Its objective is the Three Forks formation. It consists of 360K gross/235K net acres; 164 1280-acre units; 12 wells in 2010; 46 in 2011; $280 million CAPEX in 2011

November 2, 2010: This is most interesting. I posted the above on October 31, 2010. Just two days later there's a story in the Dickinson Press that Whiting is requesting Belfield to rezone agricultural land near Belfield to industrial use. The article did not say where the area of interest is, but it doesn't take a lot of imagination to think it might be a half-mile north of Belfield, where the city put in their first set of traffic lights.

Update on the Stroh Well With the Broken Casing Plug

This is what makes the blog fun.

Sometime ago I noticed that a Stroh well reported 25 barrels/day on initial production, and suggested that there would be an explanation.

Shortly after that someone left a comment explaining a problem with the well. That was back in September (2010).

Today, I received a comment updating that well. The problem was fixed and they are ready to frack the well. That alone was very interesting.  But the rest of the story: the unfracked well flowed at 960 barrels/day based on initial flowback.  So, they will frack later this week.

For whole story, click here.

No News From the Souris Oil Field (Spearfish, ND, USA)

Someone asked me why there is so little news regarding the Spearfish formation in northwestern/north-central North Dakota?

Here was my reply. I replied as a comment elsewhere but it was such a long reply, and because it might be of interest to a more general audience, here is my answer.  Again, this is just my opinion; maybe others have more insight.

Question: Why is there so little news regarding the Spearfish formation in Bottineau County?

Answer: I have been wondering the same thing, why so little news. 

This is what the NDIC website reports regarding the Spearfish play in the Souris field:

For all intents and purposes, the only operator currently in the Souris field (Spearfish formation) is EOG.

EOG has 16 permits/file numbers in the Souris field. Two of the wells are active (A) and have reported out, which I have posted on this blog. An additional three permits are confidential (C). None of these three have a date associated with them, which means the wells are not complete. I do not know if they have even spudded; EOG does not frack between November and March. If the wells are not fracked before December, they will not be fracked until the spring (unless EOG makes exceptions regarding fracking; or their policy has changed).

That accounts for five permits. The other eleven (11) file numbers are listed as LOC: locations with permits to drill but no activity.

Of all the operators in the Bakken, EOG provides the least information on their on-going operations (in my opinion); they are very, very good at holding things close to their chests, as they say. I have no problem with that. None whatsoever.

Since the wells will not be gushers (huge IPs), individual wells will not catch the attention of the local press, and there is little reason for EOG to issue press releases ahead of the confidential release date to tell folks how the wells are going.

EOG is a huge company. Its market cap is $24 billion. Unlike WLL (market cap, $6 billion), which has several presentations at their website to download, EOG has only one presentation. WLL presentations are exhaustive, up to 60 - 70 slides. EOG's presentation is 19 slides and devotes one slide -- one slide -- to the Bakken/Three Forks and none to the Spearfish.

Suffice it to say: a) oil companies are not in the business of telegraphing their on-going operations; b) the Spearfish is but a pixel on EOG's radar scope; and, c) for now, the Spearfish has local interest.

The best I can hope for is some local folks taking a drive out there and seeing if there is any activity on the three confidential well pads.

Updates

Update, November 2, 2010: the above summarized the 16 EOG wells in Souris oil field. There are others, including Boundary 4-27H, a wildcat, just a couple of miles south of the Souris. That well is "plugged or producing" (obviously producing). In the November hearing dockets, case number 13429, EOG has requested temporary spacing for Boundary 4-27H, which means they have struck meaningful amount of oil.

Using Google Earth to See Your Oil Well Location

You will be jumping back and forth between an application and your browser for this to work. It is amazingly simple. The key is to be able to download Google Earth on your computer.

1. Install Google Earth on your computer. Google Earth is an application. I leave the Google Earth icon in my dock at the bottom of my desktop (on an iMac).

2. Click the following and you will be back to your browser:  Convert section-township-range at this site. This is "Earth Point." It is free but you can pay for additional services. I am using only the free service.

• About 1/3 down the page is: "Convert Township, Range and Section to Latitude and Longitude"
• Use drop-down menu to click on "North Dakota"
• Fifth Meridian will automatically be there for North Dakota (that's what you want)
• Use drop-down menus to fill in township, range, and section
• Then click on the "VIEW" button
• Automatically, the longitude and latitude will show up
• Run your cursor over the centroid longitude, latitude; it will look something like this: 48.4377284, -102.8965553 and "copy" 

3. Now, go back to Google Earth, which is an application that you downloaded in step 1; it is not in your browser; it is an application. If you put the icon in your dock at the base of your desktop, simply click on the Google Earth icon.

4. At the very top, on the left, at the Google Earth application, click on "Fly me."

5. Right below "Fly me," paste in your centroid longitude, latitude, and then hit the search magnifying glass, and Google Earth will take you directly to your section-township-range.

6. To the best of my knowledge, the photos are not dynamic; like all photographs they are dynamic and will be updated periodically. I have no control over when they will be updated.

For Newbies: For An Overview of the Bakken, Start With a Whiting Presentation

For newbies: I have said this several times, but it bears repeating: Whiting has the best corporate presentations among the Bakken oil exploration and production companies.

Go to their website, and click on their latest corporate presentation. Not only will you learn a lot about Whiting, but you will also learn a lot about the Bakken. With a couple more clicks you can find Whiting's 2010 IPAA conference presentation. If you can find that one, it's even better than the latest corporate presentation. The "Q & A" slides holds some of the best information about Bakken wells I've seen.

Scroll through the slides.

Recent completions and initial production figures
The first slide that might catch your attention is the one that updates their current year drilling program. Here are just a few of their latest examples (numbers in red are the initial production numbers):

• 19044, 2,110, Anderson 21-7H, Sanish
• 18953, 2,877, Lacey 12-10H2, Sanish
• 19069, 2,440, Strobeck 12-12H, Sanish
• 18947, 2,984, Dishman 13-19H, Sanish
• 18869, 1,080, Smith 44-26H, Sanish
• 18658, 2,973, Mayer 12-3H, Sanish, 22 stage frac
• 18965, 1,389, Satterthwaite, Sanish
• 18990, 1,236, Kinfe River State 21-16H, Sanish
• 18928, 2,137, Ogden 12-3H, Sanish
• 18876, 3,293, Rohde 14-6XH, Sanish, 22 stage frac; average 1,153 boe first 30 days
• 18743, 1,669, Miller 43-10H, Sanish
• 18926, 2,322, Hagey 12-13H, Sanish
• 18477, 1,875, Oppenboen 12-5H, Sanish
• 18711, 1,431, Fladeland 12-10H
• 18553, 1,910, Kannianen 43-31H
• 18882, 1,694, Peterson 13-4H, Sanish
• 18549, 1,211, Littlefield 21-7H, Sanish
• 18853, 1,611, Moore 14-7XH 

Location of Important Wells, Pipelines, Natural Gas Gathering Plants
Another slide that should get your attention is the slide that shows the completed wells in the Sanish and the Parshall oil fields, with the location of selected wells such as the Maki 11-27H (4,761); the Fladeland 12-10H (4,431); and the Hansen 12-20H (4,144).  That map also shows the location of the Robinson Lake Gas Plant, and the local pipelines connecting to major pipelines such as the Enbridge. Note the Behr 11-34H well (3,027): the Behr was one of the early wells, completed June, 2008, with 10 fracture stages, and as of June, 2010, two years later, had produced 580,000 barrels of oil (at $50/barrel --> $29 million at the wellhead).

Sanish Field Development Program
One of the new slides on Whiting's corporate presentations is a graphic explanation of the wells they are putting into the Sanish oil field. The slide is titled: "Sanish Field Development Program."

Initially, Whiting placed two long laterals parallel to each other, running northwest to southeast in each 1,280-acre spacing unit, targeting the Bakken formation. Then they added the Bakken cross-unit wells, long laterals, again parallel to the original wells, but capturing the southwest corner and the northeast corner of each section missed by the original two long laterals. In some places in the Bakken, instead of long lateral cross-unit wells, they put in short lateral wing wells which accomplished the same thing (capturing the southwest corner and the northeast corn of each section missed by the two original long laterals).

Meanwhile, in the Three Forks, the basic configuration is one long lateral flanked by two slightly shorter long laterals; all three horizontals running parallel to each other, northwest to southeast, as in the Bakken.

In a 1,280-acre spacing unit with horizontals in both the Bakken and the Three Forks formations, Whiting will have three long laterals in the TFS and two long laterals and two wing wells (short laterals), a total of seven wells in each 1,280-acre spacing unit, and the equivalent of about six short laterals in each section in the Sanish. When it's all completed, Whiting expects to have 534 wells in the Sanish oil field. Eighty-three of these will be wing wells (short laterals) but all the rest will be long laterals (or slightly shortened Three Forks long lateral wells ). 

Whiting estimates that the average estimated ultimate recovery (EUR) for each of these wells will be 850,000 barrels of oil equivalent (at $50/barrel --> $42.5 million/well). The cost to complete each of these wells is estimated to be $5 million, down from the $6 - $8 million quoted earlier in the boom.

So far, this discussion has been limited to the Sanish oil field, just one field that Whiting is operating in the Bakken, albeit its most prolific field. The Sanish is one of the most prolific fields in the Bakken; it is a relatively large field for the Bakken, encompassing about four townships, about 192 sections. Fields can increase in size if not hemmed in by other fields. The Sanish is pretty much hemmed in; it probably won't get any bigger; there are only about six sections abutting the Sanish that are not part of any named field.

Bakken Decline Rate
Do not be alarmed by the horrendous decline rate in the Bakken. This is a well-known phenomenon, and my hunch is that the operators are working hard at attenuating the decline. Two things to note: the high initial production which lasts for one to three months makes a nice dent in paying for the well. Second, where the production stabilizes is the important thing to note. A well that has paid for itself in the first six months may continue to produce at 200 barrels/day for years. Following the initial payoff, the estimated ultimate recovery (EUR) is the real number of interest.

Note
I do not hold shares in Whiting Petroleum Corporation (WLL). I missed this one when I first started investing in the Bakken a couple of years ago. I do hold shares in the Whiting Trust (WHX) for the distribution but that is a short term holding.

Some ridiculous back-of-the-envelope calculations

• WLL has mineral acreage and is operating in much more than just the Bakken
• Inside the Bakken, WLL has mineral acreage and is operating in more than just the Sanish
• As noted above: when completed, WLL plans to have 534 wells in the Sanish
• WLL's EUR for each well in the Sanish: 850,000 boe
• At $50/bbl: 850,000 bbls/well x 534 wells x $50 = $23 billion at the wellhead
• For me, it's hard to believe the price of oil will trend lower over the next 20 years
• Today, the market cap for WLL is under $6 billion (Yahoo!Financial)
• WLL's P/E is 24
• Yahoo!Financial reports WLL's EPS at $4.21 (I don't know if this is current)
• WLL reported $1.30 (excluding items)/share 3Q10 = $5.20/share
• I have said many times: I have no idea how to value these companies; the first question is whether they are value companies or growth companies; the P/E suggests a hybrid

Miscellaneous Data
According to the NDIC website, 231 permits have been issued for the Sanish oil field since oil was first discovered in North Dakota (in 1951)
WLL has 172 of those permits
Of the 172 WLL permits:

• 93 are actively producing oil and all were drilled in the current boom (since 2008)
• 28 are on the confidential list (C)
• 26 are still being drilled (DRL)
• 21 represent locations permitted to drill (LOC)
• 4 permits are now canceled (PNC)
• There have been no dry wells