Filloon on Denbury in the Bakken

Link here.

One issue of note is Denbury plans to decrease its rig count to 4 from a high of 7 in 2011. This could be due to several Bakken issues. Lower Bakken crude prices and higher costs could both be reasons, as Denbury has always done a very good job with its EOR projects, in keeping costs down and hitting production numbers. This is a variable we will need to monitor in upcoming quarters.

Denbury has stated it has reduced the number of rigs it has had under contract because it would like to only use efficient flex drilling rigs. These rigs are very efficient in pad drilling, which is why it only will need four as it progresses into an aggressive pad drilling program.

Filloon is absolutely correct. Folks who have not kept up with the Bakken may not be aware that when this all began, it was taking 30 - 45 days for a well to reach total depth. Now, it should be under a month, and some records have been set, down to 16 days if I recall.

In addition, pad drilling minimizes time needed to move a rig from one drilling location to the next.

The number of rigs in North Dakota is an interesting data point, but as a single data point, minor changes in the overall count don't have much relevance. My hunch is that going from seven to four will result in a huge savings without much loss in capability.