A Filloon Bakken Update: Rigs Are Moving To The STACK/SCOOP -- July 2, 2016

The SeekingAlpha post was dated July 2, 2016. It will be archived. To say the least, it's incredible how much information Mike Filloon provides.

His analysis today includes some nice breakeven prices.

Summary:

• STACK well results have been excellent, and rival results have been seen in the Permian.
• Since it's a newer play, chances are that well costs will reduce to a greater degree than in more mature plays like the Permian, Eagle Ford and Bakken.
• Operators like CLR, NFX, XEC, and DVN all have the STACK as top plays in its portfolio, and will continue to benefit from excellent well economics.

From the post:

Although many thought the Big 3 were the best plays in the US may have recently found they were incorrect.

Keep in mind, this play has been worked for a very long time, but no one realized just how good it was.

The SCOOP/STACK play in Oklahoma may be one of those plays initially deemed a little better than average, when in reality it is a top play.

The reason I say this, is after this period of time most geologists would have figured out where the best plays may be. It is difficult to know which intervals will outperform, but a play of this magnitude is difficult to miss. There are reasons, as the US has a massive collection of rock capable of producing oil and natural gas. Many times these areas contain several intervals. We also have seen a big move towards combo plays. By this I mean intervals that produce decent volumes of oil and natural gas. When oil prices were very high when compared to natural gas, there was less value in non-liquids.

It is also important to note what natural gas does when it produces in concert with liquids. Wells with higher percentages of gas also have higher well pressures. The same is true for deeper formations. As a general rule, the deeper the shale the higher the well pressures. Greater pressures mean resource is more actively pushed up and out of the well bore. Since more resource is returned in a shorter period of time, payback times are shorter.

Newer well designs like MegaFracs and Slickwater work better in higher well pressure environments. The combination of lower oil prices and better well design have caused a shift to these types of plays.