Bakken Is Now $6/Bbl Cheaper Than WTI -- Due To "Over-Supply" In The Bakken; Widest Discount So Far This Year

Bloomberg is reporting:

Bakken crude weakened to the lowest level this year against U.S. benchmark West Texas Intermediate with the number of wells and the amount of production in the North Dakota shale formation at record highs.

Wells drilled in the Bakken grew to 562 from 556 in the first quarter, according to data from Bloomberg Industries. Monthly production also set a record in March, increasing 0.5 percent to 718,791 barrels a day, the state Industrial Commission said May 15.

“What you’re really starting to see is the advent of pad drilling,” said Christian O’Neill, an energy analyst in New York with Bloomberg Industries. “The companies have more time within these plays, they’re getting more and more efficient and their recovery rates are also steadily rising.”

Bakken fell $1 a barrel to $6 below WTI at 2:05 p.m. New York time, according to data compiled by Bloomberg. That’s the lowest level since Nov. 16.

One 30-second data point: 550 wells/quarter = 2,200 wells/annum.

It should be noted that:

• the first quarter is the most difficult quarter to drill/complete a well due to weather
• a lot of drilled wells are waiting to be fracked

It should be noted that, a lot of wells are waiting to be fracked due to

• winter weather
• pad drilling (they often won't frack until the last well on a pad reaches total depth)

For these reasons, Mike Filloon recently commented:

Drilling in the first quarter threw analyst projections off as costs were higher as more drilling work got done, but very few wells were put to sales. I am expecting some very big top and bottom line numbers in the third quarter of this year. This will see the bulk of pad drilling production, and this will be very difficult to model given the large number of completed wells. Differentials could be the biggest story.