What Explains The Hawkinson Phenomenon? -- September 24, 2014

CLR Corporate Presentation

The Hawkinson Pad

September, 2014

Slide 27

The links to other posts regarding CLR's most recent corporate presentation are located here. 

That CLR presentation (it's linked above) was simply brilliant.

To really get full value from that presentation, I have had to go back to it and study it slide by slide. I'm just blown away about how much information was packed into that presentation.

One of the problems I have, and I assume many people have, is information overload. There is just so much to absorb. It is easy to start clicking through the slides quickly without really taking time to do even basic analysis. 

Take these two slides, for example:

http://2.bp.blogspot.com/-yiHgIcxbZt4/VCLq8xb9LVI/AAAAAAAADzQ/eOJnJaCcGKM/s1600/Screen%2BShot%2B2014-09-24%2Bat%2B10.58.43%2BAM.png

I have seen so many graphs of this nature, they start to lose their "wow" effect. 

But look at those two graphs; they are stunning.

First, the middle Bakken graph on the left. CLR's middle Bakken model is 603K boe which is very, very good and "everyone" should be very, very happy with a 603K boe model. But look at the AVERAGE of the Hawkinson middle Bakken: at 400 days the AVERAGE production is 200K, twice the 100K at the 603K model. I find that amazing. And no one has really commented on that at other blogs, as far as I know.

The EUR may or may not need to be adjusted, but the payback is accelerated. On slide 26, CLR says the ROR is > 100%.

The TF graph is even more stunning.  Look at TF1. Years ago Lynn Helms said the Three Forks would be better than the middle Bakken. He was talking about the upper Three Forks (TF1) because that's all we knew at the time. No one knew about or was talking about the lower benches of the Three Forks.

At 400 days, TF1 hits 250K vs 200K for middle Bakken (yes, I am cherry picking the best wells, but it is what it is). Either the AVERAGE is not shown, or it is right on the 603K MODEL dotted line (and it's my hunch it is). If so, the TF3 is pulling down the average. The TF1 is great; and TF2 is very good; throw out the TF3 and the AVERAGE would be quite impressive. If the TF3 wells are economical, imagine how much money they will make on TF1 and TF2.

Again, the EUR may or may not need to be adjusted, but the payback is accelerated. On slide 26, CLR says the ROR is > 100%.

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That should be enough, but I think there's even more. In a previous presentation, and in this one, CLR suggests that better completion techniques (high proppant volume and slickwater) could increase production by 35% (proven on various wells; this is not theoretical).

[Later: below I stated I did not know whether CLR used the "enhanced" completion techniques; the slides were a bit unclear. However, I have since listened to the webcast and it was clearly stated that the Hawkinson wells were completed before the new enhanced completion methods were known or used.]

I don't have the energy to check all the Hawkinson wells, but it's my hunch CLR did not use high proppant volume; I don't know about slickwater. They mention "enhanced" completion techniques on one slide connected with the Hawkinson wells but they don't actually say what they mean (maybe they did and I missed it; maybe they did in the oral remarks).

As noted, I don't have the energy to check the fracking data for the Hawkinson wells (right now; maybe later) but I did check one:

• 24455, 2,323, CLR, Hawkinson 13-22H, Oakdale, middle Bakken, 29 stages, 2.7 million lbs ceramic, t10/13; cum 19K 10/13;

Based on the permit number, #24455 was probably one of the later (more recent) Hawkinson wells to be drilled; I don't know for sure. I don't have the energy to check. Regardless, this well was spud over a year ago, and completed about a year ago, long before new completion technique data was published.

This Hawkinson well: fracking: 29 stages (VERY LOW) and 2.7 million lbs (also VERY LOW). This is not HIGH VOLUME PROPPANT. I don't know if they used Slickwater.

For newbies: some might say that a minimum of 4 million lbs of proppant is required for a long lateral to be considered "high volume proppant." I'm not so sure. EOG is truly testing "high volume proppant" -- they have been using 10 million, 12 million, and I can't recall, but maybe even 14 million lbs of sand on some of their Parshall oil field wells. That's truly "high volume proppant" and no one else is coming close to EOG. Yet.

But if CLR's AVERAGE curves in the Hawkinson pad are double the 603K EUR model and they haven't even used the new techniques: a) 3-perforations vs 1-perforation for each stage which Whiting is testing; b) only 29 stages when the new standard seems to be at least 36 stages; c) high proppant, at least 4 million lbs, one wonders what they might yet achieve.

These two graphs are absolutely incredible; Zeits did not mention them (yet) and I doubt anyone has really taken a good look at them; we are simply inundated with data and our eyes tend to glaze over yet another graph.

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Now back to Mason Inman. This begs the question: if the Hawkinson wells are so much better than the "average" 603K EUR model well in the Bakken, and new completion techniques were not used what explains the phenomenon of such high curves?

[Again, CLR talks about "enhanced completion techniques" but does not go into detail on that in this section of the presentation, but it was not "high volume proppant."]