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Saturday, September 29, 2012

Random Look at Rigs Operating in North Dakota

Updates

September 30, 2012: a reader sent in the breakdown of active rigs by operator when the number of active rigs in North Dakota hit a record -- May 31, 2012. The CLR and the OXY USA numbers account for a huge percent of the recent decrease in active rigs. 

The smaller operators have almost no room to maneuver; with only one or two rigs, they can't cut much if they want to stay in the Bakken.

It is interesting that the low-cost driller has appeared to increase the number of active rigs.

BEXP and CLR, I believe, will be cutting one more rig each. With pad drilling, less rigs are needed. A random thought: CLR probably knows the Bakken as well as anyone, and may be moving into the "manufacturing" stage ahead of others, requiring significantly fewer rigs to meet internal targets. See long comment below dated September 30, 2012, -- some great thoughts.

Original Post

There's been a lot of talk this past year about drillers laying down rigs to save money/cut costs.

Here are some data points, taken from August 22, 2011, and September 28, 2012, one year later. On August 22, 2011, there were 195 active rigs in North Dakota, at a time when the number of rigs was still increasing and would eventually hit a high of 218 on May 29, 2012. Three months later, on August 7, 2012, it had dropped to 198. Dropping from 218 to 198 in less than three months seems precipitous but spread out over 20+ companies, it doesn't amount to much in the big scheme of things. Especially when one considers how much faster rigs are reaching total depth, pad drilling, and improved infrastructure (for "everything").

I wish I had a breakdown of wells when "we" were at a record (218) and it's possible I posted the distribution of rigs about that time, but I don't recall. For me, I just can't get too excited about the talk about "stacking" rigs. By the say, in its most recent update American Eagle said they had contracted for another rig (which might be reflected below) demonstrating that some companies will drop rigs, others will add rigs. And, oh by the way, there are new drillers in the Bakken.

Remember, these are snapshots in time, and on any given day, the number could change. Again, these are data points taken from August 22, 2011; May 31, 2012; and,  September 28, 2012, one year later. Remember: the record number of active rigs was at the end of May, 2012.

So, snapshot below: August 22, 2011 --> May 31, 2012 --> September 28, 2012 --> March 4, 2013
  • BEXP: 16 --> 18 --> 15 --> 12 (in Sept 2012, expected to see another rig stacked)
  • BR: 9 --> 8 --> 8 --> 9
  • CLR: 14 --> 24 --> 15  --> 18 (in Sept 2012, change in philosophy)
  • Enerplus: 2 --> 3 --> 3 --> 2
  • EOG: 7 --> 7 --> 5 --> 5
  • Fidelity: 4 --> 4 --> 5 --> 5
  • G3 Operating: 2 --> 1 --> 3 --> 2
  • Hess: 17 --> 19 --> 17 --> 16
  • Hunt: 2 --> 4 --> 3 --> 2
  • KOG: 8 --> 7 --> 8 --> 8
  • MRO: 6 --> 7 --> 7 --> 5
  • Newfield: 2 --> 2 --> 3 --> 3
  • Oasis: 8 --> 8 --> 8 --> 11
  • OXY USA: 6 --> 12 --> 6 --> 5
  • Petro-Hunt: 12 --> 13 -->  10 --> 12
  • Triangle: 2 --> 2 --> 3 --> 2
  • Whiting: 17 --> 15 --> 18 --> 17
  • WPX: 6 --> 6 --> 6 --> 4
  • XTO: 7 --> 7--> 5 --> 9
There are yet to be rigs "retired," and again this is just a snapshot on two given days.

***************************

And then there's this:

Johnny, Are You Gay, Hillbilly Moon Explosion

9 comments:

  1. Here are the distribution of rigs by Operator for 5/31. The count was 214
    Operator Well Name and Number
    ABRAXAS PETROLM CORP. Count 1
    AMERICAN EAGLE Count 1
    BAKKEN AQUA, LLC Count 1
    BAYTEX ENERGY USA LTD Count 2
    BOREJAKS ENERGY SERVICES Count 1
    BRIGHAM OIL & GAS LP Count 18
    BURLINGTON RES O&G CO Count 8
    CONTINENTAL RESOURCES Count 24
    CORNERSTONE NAT RES LLC Count 1
    CRESCENT PT ENERGY US Count 3
    DENBURY ONSHORE Count 5
    ENCORE ENERGY PARTNERS OP LLC Count 1
    ENERPLUS RES USA CORP Count 3
    EOG RESOURCES INC Count 7
    FIDELITY EXPL & PROD CO Count 4
    G3 OPERATING LLC Count 1
    GADECO, LLC Count 1
    GMX RESOURCES Count 1
    HELIS OIL & GAS CO. LLC Count 2
    HESS CORPORATION Count 19
    HUNT OIL COMPANY Count 4
    KODIAK OIL & GAS (USA) INC Count 7
    LIBERTY RESOURCES Count 2
    MARATHON OIL CO Count 7
    MARQUIS ALLIANCE ENERGY Count 1
    MUREX PETROLEUM CORP Count 2
    NEWFIELD PROD CO Count 2
    OASIS PETRO NO AMER Count 8
    OXY USA INC Count 12
    PETRO HUNT LLC Count 13
    PROWATER, LLC. Count 1
    QEP ENERGY CO Count 4
    SAMSON RESOURCES CO Count 1
    SINCLAIR OIL & GAS CO Count 1
    SLAWSON EXPLORATION Count 5
    SM ENERGY CO Count 3
    TRIANGLE USA PETROLEUM Count 2
    TRUE OIL LLC Count 1
    WHITING OIL AND GAS CORP Count 15
    WPX ENERGY WILLISTON LLC Count 6
    XTO ENERGY INC Count 7
    ZAVANNA LLC Count 2
    ZENERGY INC Count 4

    Total Rigs 214

    Interestingly, there are some drops in some of the big guys....like Hess....I do have the rig names and maybe those droped over the past year are due to being older rigs now being replaced by the more modern rigs you referenced in a link to a video yesterda. I did look at Hess's production and it looks like they are spudding 17 wells a month--although that appears to be the first drill not the actual completed number. Net..Net is that wells are being drilled faster and more efficiently...and therefore less rigs isn't necessarily a bad omen :-)

    ReplyDelete
    Replies
    1. Wow, thank you very much. When I get a chance I will move your numbers up to the main body of the post, so it's easier for readers to compare.

      Thank you.

      Wow, I am just amazed at the data readers keep. Thank you.

      Delete
    2. Yes, I agree that less rigs is not a bad omen. The metrics to follow are production, new permits, completed wells. Permitting is hitting new records which I find very, very interesting.

      Delete
  2. CLR is down considerably. I think it will be short lived. Look at their web site under career opportunities and you will see they are advertising to fill 11 job openings in their Killdeer office. 3 are for construction foremen which oversee construction and reclaiming of drilling pads. I think they have one rig drilling in Dunn County right now.

    Also wasn't August a record month for drilling permits issued?

    I think several large operators have scaled back drilling operations for multiple reasons and they all have to do with making more profit down the road.

    They want to stack out a few rigs and put a few trucks in the parking lots to exert some leverage for a better deal. I think Harold Hamm has stated he wants to see a 25% reduction in costs.

    If you go to the NDIC server and activate the layer showing 2560s then zoom into the area around the Killdeer Mountains you can see several spacing units established or under consideration. Some of the latest units for instance case 18102 I believe would allow for full development with 3 eco pads on a unit. If memory serves me correct A 2560 in the Oakdale field would be developed as two 1280s and have 17 more wells drilled on each.

    I think these large operators are putting into position a large inventory of work to be completed then going to the service companies and telling them they can be busy for a long time as part of this team but they have to do the work at the right price.

    As this next phase moves to full steam ahead there will be a big increase in production I feel which new loading and unloading facilities required in far off places being completed and will allow for the movement of the new production. But overall putting a bunch more oil on the market will probably drive oil prices down so margins will be squeezed therefore explaining the need for the operators to get concessions from service companies. Hence the current slow down, and calm before the storm.

    ReplyDelete
    Replies
    1. Very interesting...I especially like the part about long-term partnerships with oil service companies.

      And you are very correct about huge production coming off large spacing units with two or three multi-well pads: new/more infrastructure will be required to handle all that oil.

      Delete
    2. And yes, another example of 18 wells on one 1280-acre spacing unit:

      NDIC hearing dockets, September, 2012:

      Case 18670, CLR, Oakdale-Bakken, 18 wells on each existing 1280-acre unit; Dunn County.

      Delete
    3. Yes, permitting set a record in July (broke the November 2010 record) and then I think the August permits will set a record. For sure, the September permits will set a record, and September was a very short month (holiday and last two days of the month a weekend).

      Delete
  3. CLR will announce big new 5 year goals next week.

    Anon 1

    ReplyDelete
    Replies
    1. I was just thinking about CLR this morning; their strategy. I thought maybe they would be sitting back for awhile to watch the dust settle -- change in Bakken drilling strategy; presidential election; Mideast saber-rattling; and well on their way to meeting earlier announced goals, I thought they might wait awhile to make new announcements. I can hardly wait.

      I still think they can do with 12 rigs in 2013 what they could with 24 rigs two years ago: reaching total depth in half the time, pad drilling, easier access to services, sand, ceramics if others are cutting back.

      Delete

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