"Highest crude oil exposure in peer group"
Projecting $1.2 to $1.4 billion cash flow in 2012
Oil in place (numbers rounded)
- Primary rcovery: 20%
- Secondary recovery (waterflooding): 20%
- Tertiary recovery (CO2 EOR): 20%
- Oil left in place: 40%
- DNR: 97%
- WLL: 93%
- CLR: 88%
- SD: 79%
- CXO: 76%
- NFX: 69%
- NBL: 66%
- Gulf Coast: $13.50
- Bakken: $21
- 200,000 net acres
- 2Q11: 8,826 boepd
- 4Q11: 11,892 boepd
- 2Q12: 12,750 - 14,750 boepd
I am not shure if I understand the figures; does it mean that Denbury means they can produce about 60 % of the OIP? What implications does this have considering Harold Hamms 24 billion bbls based om a 6 % return of the entire bakken oil? There must be something I dont understand here!
ReplyDeleteBy the way; thank you for an exellent blog. My wife owns mineral rights in Mckenzie (Westhoma and Cora wells), and we use your blog to educate ourselwes. It wouls have been really difficult to follow the boom form this side of the atlantic without a site like yours.
That's a great question. The answers are fairly straightforward, but there will be much discussion about the actual numbers.
DeleteThe estimated ultimate recovery (EURs) for each well and the 24 billion bbl figures (Bakken and Three Forks) refers to primary production only.
Others are much more conservative then Denbury's 20%, suggesting that only 6 to 8% is recoverable through primary production.
I assume the current operators do not include secondary and tertiary production in their EURs is because a) historical definition, before there were NO such things as water flooding and CO2 EOR; b) they themselves won't be involved in secondary and tertiary production, and will sell the fields to other operators; and c) there is no guarantee that the wells, or the fields, will be suitable for such development.
When companies are raising cash from partners and when companies go to the NDIC to make their case for a particular well, they have to deal with primary production in arguing their case for a profitable well.
Bruce you provide a good answer. To expand on it further, Denbury's "60%" is a very optimistic projection but probably obtainable in places. Yet note the majority of Denbury's properties are in more traditional producing formations (not the tight shales of the Bakken). So while 60% recovery may be done elsewhere, in regard to the Bakken for now I'd lean towards Hamm's number rather than Denbury's. It remains uncertain if Enhance Oil Recovery (EOR) can be successfully done in the Bakken at all, though I certainly hope it can be.
DeleteThank you for commenting.
DeleteI agree that there is a lot of doubt whether EOR will work in the Bakken. There are some very knowledgeable folks who feel it won't work.
It will be interesting to watch.
Bruce,
ReplyDeleteAn interesting item in Denbury's presentation is what is not there. Denbury has dropped its "Almond" prospect when listing their various Bakken prospect areas. This reduced their Bakken net acres from about 260,000 to 200,000. Their Almond prospect is essentially located in Ward County, ND was acreage Encore had blocked up back in 2007 and 2008. Subsequent drilling seems to show this is beyond the NE edge of Bakken production.
This might be the first of many cases like this. At some point several of the other companies should clean their books and acknowledge not all their leased acres in N. Dakota & E. MT are Bakken prospects. Continental Resources and Hess also have similar blocks of acres which appear to be too far east and likely out of producing areas. You can review the maps on their presentations and see which companies have these large blocks of outlying acreage.
I'm guessing none of the companies will want to admit that some of their net acres are out of the play. Yet Denbury bit the bullet to provide an accurate assessment of their Bakken prospects, they deserve credit for doing so.
Incredible. Great comment. Thanks.
DeleteI noticed the "missing 66,000 acres" and was hoping someone would comment on them. This explains everything.
I've made this a stand-alone post.
http://milliondollarway.blogspot.com/2012/02/lost-66000-dnr-acres-bakken-north.html
This is a very important data point. Thank you.