MRO At UBS Energy Symposium -- Re-Fracking

Link at SeekingAlpha.

If you don't want to read everything below, the readers' Reader's Digest version regarding MRO and the Bakken

• big fields just get bigger
• more production, fewer rigs
• downspacing continues; will be expedited
• re-fracking (yup)
• recent 35,000 bopd guidance increased to 40,000 bopd guidance and heading toward 60,000 bopd

Highlights only as they relate to the Bakken, with possible exceptions, I suppose.

• significant acreage positions in North Dakota, Oklahoma and South Texas provide a large resource with significant upside. Our potential resource up 2.8 billion oil equivalent barrels provides a projected drilling inventory in excess of 10 years at current activity levels
• turning to the Bakken, where we have operated since 2006, we have a proven track record of growing not only our volumes, but our volumes outlook, a clear demonstration of the old adage that big fields just get bigger. This graph shows that our forward plan has improved every year since 2009. And in fact you will note that our 2013 plan had us producing around 35,000 oil equivalent barrels per day this year and we earlier in the year increased that guidance to approximately 40,000 oil equivalents per day
• ... from the Three Forks and other formations as well. The down-spacing and these deeper benches are leading to a growing resource inventory. We are conducting a pilot infill drilling program, which will help us define the optimal well-spacing aimed at maximizing the expected ultimate recoverable resource. We are focusing on high productivity areas for the pilots and will leveraging existing HBP or held-by-production wells to accelerate the execution of the pilot program
• in the Bakken, we have had continuous performance improvement in IPs and EURs since 2008. The improvements can be seen here in the three charts at the bottom of the slide, which illustrate improvements in these areas, 30-day average initial production rates per well, improved cumulative oil production per well, and improvement in the average 2P expected ultimate recoverable reserves per well. These significant improvements were driven by optimizing fluid volumes and hydraulic fracturing design by well plus innovative sleeve designs
• Similar to others that are there though we are looking at a couple of things that I think could impact our pace and activity level potentially in the future. One, you’ve already mentioned which is down-spacing and we continue to test down-spacing, but more specifically we are looking at high density pilots where we are combining the middle Bakken with the Three Forks from a common drill center and looking at not only the spacing between the laterals but the vertical spacing as well between the middle Bakken and the Three Forks. Then that work is really just getting started, but clearly could change or perhaps moderate our view on where we want to take activity in the future, so that’s one element, it’s the spacing question.

From Q&A:

• the second element is you are exactly right the fracturing technology if you just rewind to when we entered into the Bakken space which was 2006, 2007, we are now going back and doing some refracs on those earlier wells with the most modern best available technology from a fracturing standpoint and we are seeing significant uplift in terms of not only an enhancement in IP post-frac, but also enhancement in overall EUR. So bringing the best available technology because that’s the great thing about these resource plays is that we know that the technology is going to continue to move the bar and whether you are talking about the completion efficiency, or you are talking about the amount of recovery which today stands at a very low number, if you look at the oil in place in these wells all of that I think will continue to have us challenging where we want to ultimately take the Bakken resource. But based on the data we have today, we are very comfortable with our activity level. We feel like we are getting very good capital efficiency as shown from our drilling numbers and it’s the – it’s a growing resource. I mean you can see that resource is growing upwards to 60,000 barrels a day in the future and that’s something that we will continue to watch based on technology and the learning we get from continuing to drill