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Thursday, May 5, 2011

Highlights of the CLR Earnings Conference Call -- 1Q11 -- Bakken, North Dakota, USA

Data points [blogger comments]

Milestone: almost 1.5 years under their 5-year program to triple production from year-end 2009 to year-end 2014
  • Right on track
  • 1Q11 production stronger than expected
  • 51,663 boepd for 1Q11, 34% increase over 1Q10; 8% increase over 4Q10
  • 4Q10 was 27% higher than 4Q09
  • [51,663 bopd -- at $70/bbl --> $3.6 million/day]
  • Bakken production: 25,523 boepd in first quarter
  • [25,523 -- at $70/bbl --> $1.8 million/day]
  • This is amazing: CLR maintains production in the Red River units in southwest North Dakota; only one rig but producing 4,065 boepd from those units [4,065 --> $285,000/day (one rig)]
  • Red River unit production up 17%
  • Production grew 67% year-over-year
Notable well lists (in 1Q11)
  • 25 gross wells; 12 wells that tested over 1,000 boepd
  • The strongest: Bud 1-19H tested at almost 2,000 boepd
  • Many CLR wells restricted to minimize flaring; without restrictions could have tested double or more
  • 6 of their strongest 8 wells in Williston area (the "Williston" prospect)
The Williston Prospect
  • Still considered exploratory
  • 6 of CLR's strongest 8 wells in this prospect
  • Aakron 1-27H tested at 1,407 boepd, 3,600 psi on a 16/64" choke; a very strong well
North Dakota vs Montana
  • Less discussion separating the two
  • Now: more about the "Bakken" cross both states
Fracking
  • Experimenting with various methods
  • For the first time in years, using sliding-sleeve systems along with perf-and-plug
  • Stages: 24 is the norm, but anywhere from 18 to 30
  • Pumped their first Schlumberger "HIWAY" frac -- pulses proppant into the frac zone
Future
  • Still tens of thousands of wells to drill over next 2 to 3 decades
  • Still feel that there is at least 24 billion boe recoverable
  • USGS estimate of 4.3 billion boe recoverable based on 2007 data and reported in 2008
  • Since then a technological revolution with more than 2,000 additional wells drilled
  • The Bakken play is a conventional play with increasingly predictable well results
  • The entire scope of the Bakken (15,000 square miles) is now considered (by the oil industry) to be viable for development -- the entire scope (makes me think of Chesapeake's recent announcements
  • Will maintain
Cash Flow
  • $269 million
  • 53% higher than one year earlier
  • 22% higher than previous quarter (and remember, the current quarter hard hit by weather)
Takeaway
  • Some others in the Bakken constrained by takeaway capacity; not CLR
  • CLR first in line when pipeline operators increase capacity
  • Ship on all pipeline systems in the Bakken
  • Ship by rail out of three separate facilities
  • Can generally get around bottlenecks due to so many options
  • Operations
  • Maintain 22 rigs in the Bakken
  • Substantial backlog, currently 63 wells drilling/awaiting completion in the Bakken
  • Next 2 weeks: 13 new ND wells on-line
  • Hiland: to bring on-line its 30 million cubic feet/day plant on May 15
  • Because of Eco-Pads, production in next quarter could be lumpy
  • Need to hire a lot of professionals to meet target of tripling production

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